Private Pension Research Articles

7.L. Practice session: Is there an investment case for health at older ages?

Abstract The global demographic landscape is undergoing significant transformation due to increases in longevity and declining birth rates. According to the United Nations, the world’s population aged 65 and over is projected to more than double, reaching over 1.5 billion by 2050, while global fertility rates are expected to decline to 2.4 births per woman by 2030 and continue decreasing to 2.2 births per woman by 2050. Ageing populations have frequently concerned decision-makers due to the potential implications of changes in population age-mix for labour markets and the economy, as well as for the sustainability of public programs and spending, particularly the health sector. For example, as the share of the population at older age increases, there are concerns over how to cope with the possible economic implications of having a smaller share of people at traditional working age (with potentially more people obtaining income security through both public and private pensions) and how to respond to greater health and long-term care needs. Without appropriate policy responses, there are worries that demographic changes will have inevitable consequences for households, public finances and possibly for economic growth and development. To support policy decisions related to population ageing it is important to have informative evidence and modelling tools that allow policymakers to better understand both the implications of population ageing as well as the consequences of policy action or inaction. To this end, this session presents three recently developed modelling tools that aim to address a number of policy relevant questions related to ageing: 1) How does ageing affect health financing and are health systems unsustainable? 2) How does ageing affect economic objectives and does health at older ages matter? 3) Can we develop economically relevant measures of health at older ages if older people do not have formal ties to the labour force? Using data and analyses from a range of European countries, we will demonstrate empirically that the way ageing affects health financing systems, economies, and societies more broadly reflects policy choices and is not an inevitable consequence of demographic changes. Key messages • Policymakers must prioritize informed policies to comprehensively understand the impact of aging on health financing and economies, facilitating the development of sustainable solutions. • Immediate action is imperative to address the implications of aging on labor markets and public spending, ensuring future economic stability and safeguarding societal well-being.

Failure in Fully Funded Pensions: Voluntary Exchange and Coercion

Private pension failure for much of the economics mainstream would be regarded as an artifact of markets that are insufficiently regulated, such that suppliers are able to exploit monopoly advantages, and are free to make serious errors of judgment. Market failure analysis is flawed, however, by its own failure to acknowledge salient elements of the institutional context of private pension provision, which, while it has been regulated according to approved public interest ends, has been prone to suboptimal investment performance. Drawing on classical liberal political economy, an alternative account of private pension failure would emphasize the perverse consequences of state intrusion in the market for retirement income protection. The origins of regulation failure can be traced back to a combination of two policy decision dynamics, one of intentional rent creation, a second of imperfect knowledge and understanding of markets resulting in flawed regulatory arrangements. By stifling competition, regulation diminishes the capacity of pension markets to serve pension plan participants by means of improved investment performance. The prevalence of private pension failure is an artifact of regulatory intrusiveness. Given this direction of causality, a better approach to policy would rest centrally on the deregulation of pension markets.

Deciphering the Local Origins of Neoliberalism in Central and Eastern Europe: The Example of Lithuania

This article studies the local lineage of neoliberalism in Lithuania, examining its intellectual pedigree, early proponents and the structural shifts that facilitated its rise. The latter are attributed to the openings created by perestroika and the development of the communication network linking economists within the Reform Movement of Lithuania, émigré intellectuals and Hillsdale College in Michigan. Information exchanges produced within this network generated embryonic neoliberal ideas before 1991. The network also contributed to the establishment of an influential think tank, the Lithuanian Free Market Institute (LFMI), whose policy influence is illustrated by surveying monetary and pension privatisation reforms.

The Importance of Supplementary Private Pension as a Form of Life Planning

The Importance of Supplementary Private Pension as a Form of Life Planning

The tasks of stabilizing existing pension systems and the main vectors of reforms in the practice of foreign countries

The article analyzes some common approaches to reforming pension systems for different states, focused mainly on improving their financial and social stability in the medium term. The main focus is on the issues of increasing the working life expectancy of the working part of the population by increasing the retirement age and limiting the possibility of early retirement for certain categories of employees and the introduction of private saving programs of various types to solve the problem of reducing the financial burden on the state and increasing the responsibility of citizens for their financial well-being in retirement. Various forms and models of organization of private pension plans are considered, depending largely on the structure of the labor market and national traditions, their advantages and disadvantages.

Exploring the Impact of Behavioural Factors and Personality Traits on Private Pension System Participation: A Machine Learning Approach

Exploring the Impact of Behavioural Factors and Personality Traits on Private Pension System Participation: A Machine Learning Approach

Performance of active portfolio managers when the benchmark is not observable

We present a specialized methodology designed for evaluating the performance of active portfolio managers in situations where the common benchmark portfolio cannot be directly observed or determined by the analyzing agent. This method assesses performance by examining the excess alpha of an optimal active fund with respect to a combination of such funds that efficiently minimizes residual risk. After establishing the theoretical underpinnings of this approach and deriving the necessary statistical tests, we then showcase its practical application in assessing the historical performance of pension fund administrators operating within the Peruvian Private Pension System.

On the Legal Nature of Guarantees of Rights and Legal Interests of Private Pension Fund Members

On the Legal Nature of Guarantees of Rights and Legal Interests of Private Pension Fund Members

Financial Crisis, Confidence in Financial Markets and Participation in Private Pension Plans in Germany

The financial crisis of 2008/2009 has not only left its mark on the value of retirement savings, but also on savings and investment behaviour. It has led to a loss of confidence in financial markets and its main protagonists. However, trust is a key mechanism for savings and investment decisions. We illustrate the loss of trust by looking at the number of pension plans purchased in the years following the financial crisis. The paper is based on data of the study on ‘Life courses and old-age provisions’ (LeA, Lebensverläufe und Altersvorsorge). The data was gathered in 2016 and provides information on the life histories of people living in Germany who were born between 1957 and 1976, as well as on pension entitlements in all three pillars of the German pension system. The analysis concentrates on so-called Riester pension plans, the most dynamic private pension scheme in Germany. We estimate a panel fixed-effects logit model to examine whether the financial crisis had an impact on the participation in Riester pension plans. Results show that instead of a shock effect relating to the crisis years, we see a negative linear effect following the crisis.

주관적 건강 상태에 따른 노인의 지역사회 계속거주 영향 요인

Low birth rate and aging are rapidly changing the demographic of our society and pushing us entering into a super aged society. In the super-aged society where more than 20% of the total population is over 65 years old, the residence problem for elderly has become a growing social problem as life expectancy increases. This study used the '2020 Survey on the Elderly' and a multinomial logistic regression model to analyze factors affecting AIP (Aging in Place) attitudes among the elderly. As a result, first, AIP attitudes against 'moving to good housing' when healthy are seen when sample are older, single, live in their own home, and do not have a private or retirement pension. AIP attitude toward 'moving to a house with care and convenience services' appears in those who are unmarried, have a short period of education, live in monthly rentals, and receive housing pension and farmland pension. Next, AIP attitude against ‘living with children’ when having difficulty with mobility appears in male, single, living in own home, and not receiving a private or retirement pension. The AIP attitude against 'moving to welfare housing' appears in cases where the period of education is short, living in a self-owned house, receiving housing pension or farmland pension, and having many financial assets or low debt. The study highlights the importance of cash flow for elderly households. AIP attitudes are linked to private and public income. Securing regular income for retired seniors and improving cash flow policies is crucial for realizing AIP.

Pension Reform Policy in Latin America: A Fuzzy-Set Qualitative Comparative Analysis

Latin American countries have been at the forefront of pension privatization and since 2008 they have also pioneered reform reversals. Previous studies have focused on single cases or a small number of them, given that pension reform is a complex phenomenon arising from the combination of different causes. Using fuzzy-set Qualitative Comparative Analysis (fsQCA), the article analyzes a set of 32 pension reform cases in eight countries from the early 1990s until 2021. It finds four different pathways that combine institutional, structural and policy legacy conditions. It demonstrates that fsQCA is a useful tool for broader comparative policy work.

Challenging the policy space: The legitimation of alternatives in Chilean pension policy (1980–2019)

AbstractIn October 2019, Chile experienced its most significant cycle of protests since the return to democracy in 1990; one of the primary demands of this cycle was the improvement of pensions. What effect did the October upheaval have on the Chilean pension policy debate? How have ideas about the Chilean pension plan changed from its creation in 1981−2019? What are the main drivers of these changes? In this study, we propose the concept of policy space, which we define as the realm of ideas wherein public policies are debated and whose boundaries are determined by the legitimacy of ideas from relevant actors. We use a process‐tracing approach based on qualitative data triangulation from several techniques including in‐depth interviews, press analysis, and secondary document review. The findings indicate that the shift in the ideas related to pension policy is explained by two drivers—long‐term linkage among actors and short‐term social mobilization against the private pension system, which accelerated rapidly with the October 2019 protests.

PROCESS OF UKRAINE'S FINANCIAL SECTOR INSTUTIONALIZATION AND ROLE OF CORPORATE SECURITIES MARKET

This article deals with the characteristics of the institutionalization process of the financial sector in Ukraine and the role of the corporate securities market in it. It is determined that the modern domestic financial sector is characterized by significant institutional imbalances, primarily due to the insufficient effectiveness of state policy in this area. For many years, banks have been the key players in the domestic financial sector, which significantly reduced the level of financial inclusion. The development of non-banking financial institutions has been fragmentary, significantly undermining public trust in the financial sector. In particular, this concerns the activities of credit unions in Ukraine, where the market volumes of private pension provision have been minimal for a long time. Some existing institutional imbalances were overcome through the rapid digitalization of certain segments of the financial market, but the overall level of financial inclusion remains low. The process of institutionalization of the domestic financial market occurred against the background of the weakness of the corporate securities market. The article notes that this situation was a consequence of the lack of interest from joint-stock companies in market methods of capital attraction. Along with this, domestic financial institutions are not interested in investing in corporate securities. Thus, the reluctance of public corporations to place their securities on the market coincides with a peculiar investment strategy of financial institutions. As a result, the volumes of the primary corporate securities market in Ukraine are minimal (especially in the stock market), and government securities dominate the secondary market for a long time. This situation poses a series of threats to Ukraine's economic development and requires appropriate actions from the state aimed at the activation of the corporate securities market. It can now be stated that domestic public corporations are non-competitive in the global financial space, which destructively affects their market positions.

Beyond trade-offs: Exploring the changing interplay of public and private welfare provision in old age and health in the historical long-run

Modern welfare states compete with private providers of welfare in offering economic security. This is most evident in the case of pensions competing with life insurance and private pensions as well as of public health insurance competing with private insurance providers. The common view of this public–private relationship is one of a trade-off: longitudinally, political scientists describe how retrenchment was pushed by privatized welfare, whereas economists trace the crowding-out of private to public welfare provisions. Cross-sectionally, they claim that countries have lower public spending levels because they have a large private sector. We suggest a more nuanced view. Drawing on a new long-run panel data of public pension and private life insurance expenditures and contributions in 20 OECD countries since Bismarck to the current day, we show that in the postwar years a cross-sectional trade-off emerged, which then faded. Longitudinally, complementary relationships of public and private provision growth have become the norm. We argue theoretically and show empirically that trade-offs only occur if governments still hold (waning) anti-interventionist and pro-market views.

Examining the Sufficiency of Private Pension Fund in Malaysia using Monte Carlo Simulation

Retirees must make wise plans to have enough savings in order to continue living at the same level after retirement. Retirement planning is essential for ensuring enough retirement funds, which give Malaysians elderlies with a source of income to maintain their standard of living and keep them out of poverty. Uncertainties in dividend rates, interest rates, and inflation have made it difficult for Malaysia's private pension system, notably the Employee Provident Fund (EPF) scheme, to stay financially viable and capable of offering pensioners adequate protection. Thus, this study takes into consideration these important factors in analyzing the sufficiency of the private pension fund in Malaysia for different income groups namely top 20% of income earners (T20), middle 40% income earners (M40) and bottom 40% income earners (B40). Several scenarios are prepared according to Malaysian’s norm to examine the sufficiency of pension fund for each income group. The differences among the scenarios are income groups, retirement age and number of pension fund withdrawals. Then, the Monte Carlo simulation is run to calculate the accumulated value of the pension fund. Following that, the estimated monthly pension amount and the income replacement ratio are calculated to measure pension sufficiency. The results show that the income replacement ratio on average is significantly lower for all income groups as compared to the World Bank standard which stated that the income replacement ratio should not be below 70%. The results also show similar ratio with the current income replacement ratio recorded in Malaysia currently. When the number of withdrawals is taken into consideration, the income replacement ratios on average also show a decreasing pattern for all income groups. These findings indicate that the income replacement ratio in Malaysia is below the ideal rate and the pension amount is not sufficient to maintain the standard of living and purchasing power of retirees. Therefore, the government should take some action regarding this problem focusing on the B40 income group on how to increase their pension fund for better quality of life during retirement and avoid poverty.

Multichannel relational communication strategy: does one-sized strategy fit all customers?

PurposeThis study aims to capture how the association between a multichannel relational communication strategy (MRCS) and customer performance is contingent upon such customer performance (low- versus high-performance customers) and to reconcile past contradictory results in this marketing-related topic. To this end, the authors propose and validate the method of quantile regression as an unconventional, yet effective, means to proceed to that reconciliation.Design/methodology/approachThis study collected data from 4,934 customers of a private pension fund firm and accounted for both firm- and customer-initiated relational communication channels (RCCs) and for customer lifetime value (CLV). This study estimated a generalized linear model and then a quantile regression model was used to account for customer performance heterogeneity.FindingsThis study finds that specific RCCs present different levels of association with performance for low- versus high-performance customers, where outcome customer performance is the dependent variable. For example, the relation between firm-initiated communication (FIC) and performance is stronger for low-CLV customers, whereas the relation between customer-initiated communication (CIC) and performance is increasingly stronger for high-CLV customers but not for low-CLV ones. This study also finds that combining different forms of FIC can result in a negative association with customer performance, especially for low-CLV customers.Research limitations/implicationsThe authors tested the conceptual model in one single firm in the specific context of financial services and with cross-sectional data, so there should be caution when extrapolating this study’s findings.Practical implicationsThis study offers nuanced and precise managerial insights on recommended resource allocation along with relational communication efforts, showing how managers can benefit from adopting a differentiated-customer performance approach when designing their MRCS.Originality/valueThis study provides an overview of the state of the art of MRCS, proposes a contingency analysis of the relationship between MRCS and performance based on customer performance heterogeneity and suggests the quantile method to perform such analysis and help reconcile past contradictory findings. This study shows how the association between RCCs and CLV varies across the conditional quantiles of the distribution of customer performance. This study also addresses a recent call for a more holistic perspective on the relationships between independent and dependent variables.

Statutes of Limitation and Fairness in The Collection of Private Pension Contributions in South America: A Discussion for Reflection

Objective: The objective of this research is to analyze the regulatory frameworks on statute of limitations and judicial collection of contributions to private pension funds in 10 South American countries. Method: In this study, a systematic review was carried out based on the criteria of the PRISMA method, which facilitated the order in the information search process. The databases used were Web of Science, Scopus and PubMed, and no limits were set on the date of publication of the articles. Results and conclusion: Based on the selection of studies, a total of 20 studies that met the inclusion criteria were included. Common patterns were identified in the enforcement proceedings, but divergences in the statute of limitations periods in force between 3 and 10 years according to the legislation of each country. The analysis of the doctrinal debate revealed opposing technical arguments on the extension of these periods. In conclusion, there is a need for a country-specific approach and a balanced weighting of positions when reforming this sensitive area affecting regional pension systems. Research implications: This research establishes that regulatory frameworks are in need of pension reform to safeguard the integrity of vulnerable people. Originality/value: This study contributes to the reflection on the political and judicial structures that allow marginalized or economically vulnerable groups to have efficient access to justice.

Gender difference in financial behavior: a comparative analysis

Purpose- Definition of financial inclusion; FI enables adults to access and efficaciously use a range of proper financial services. It plays a crucial role in raising economic growth in point of industry, firm and national level. Accessing to the products and services are achievable with financial inclusion. In the world, financial access is not reachable due to socio-economical reasons. Financial inclusion should involve the obstacles facing, reaching out access. This has an effect on decision makings and financial behaviors. However, gender disagregated statistics are not common in literature. All economies may reach economic growth, recognizing gender differences, and enhancing awareness among households. Aim of this study is to figure out the investing / borrowing behaviors of households. This study seeks “is there a gender difference in the level of financial behavior for Turkiye?”. Methodology- We employ a questionnaire to figure out if there exists a gender difference about various metrics in financial behavior. In the research method of this study, comparative analysis was made to reach out gender differences of respondents regarding financial behavior using excell with the help of coding. Google questionnaire prepared by authors was pre-tested and then authors maintaing to send the questionnaire via social media. 102 respondents were reached out. Firstly, it was made demographic analysis of respondents, and then it was analysed the financial behavior of respondents. Findings- Findings prove the fact that there is gender difference in behavior of making payments, savings, daily life, auto and home needs, making decisions, QR Code usage, awareness of Fintech products and number of credit cards. Majority of respondents feel confident about private pension system.. However, there is slightly difference in number of private pension contracts. In general, all respondents own a bank account. Money transfer, using a bank application behavior, does not differ among individuals. Conclusion- Based upon the analysis, it may be concluded that financial behavior affects individuals’ choices and this generates differences in terms of usage, needs, decisions and awareness. Socio-economical factor plays a crucial role regarding generating awareness in financial behavior. Keywords: Financial behavior, gender differences, financial inclusion, financial literacy, behaviors of households. JEL Codes: G40, G41, M10

Aktuelle Diskussionen zum Ausbau kapitalgedeckter Altersvorsorge als Ergänzung des Rentensystems

Abstract Germany faces complex challenges in ensuring adequate pensions and the financial sustainability of its pension system amid demographic aging, necessitating comprehensive reforms. The Focus Group on Private Pensions has proposed measures to reform the private Riester pension scheme, advocating, for example, the enhancement of simplicity, transparency and flexibility. Additionally, it has debated the introduction of a state-mandated fund. The German Council of Economic Experts has also proposed a state-mandated fund with automatic enrollment and an opt-out option. However, the proposal faces skepticism and is widely debated. Despite this, the discussion on a state-mandated fund remains relevant, with political party initiatives even considering mandatory funded pensions.

ОСОБЛИВОСТІ РОЗКРИТТЯ ІНФОРМАЦІЇ У ФІНАНСОВІЙ ЗВІТНОСТІ ЗА МІЖНАРОДНИМИ СТАНДАРТАМИ

In Ukraine, quite a few enterprises prepare reports in accordance with international standards: large enterprises, public joint stock companies, insurance companies, private pension funds, and others. The article provides statistical data on the number of enterprises that are required to prepare reports in accordance with international standards by type and year. The main motivation for the decision to switch to international financial reporting is the need to attract foreign investment in the company's operations. The most expensive assets of such enterprises are usually fixed assets, which are available at each enterprise and, accordingly, depreciated. The start date of depreciation under national and international standards is different. The proposed sequence of actions in recalculating the amount of accrued depreciation of fixed assets as of the date of transition to international standards will allow to reliably assess their carrying amount. The paper describes the peculiarities of preparing notes to the financial statements in accordance with international standards. It is established that the financial statements prepared in accordance with international standards are significantly expanded in relation to the financial statements of Ukrainian enterprises prepared in accordance with NAR(S). The main indicators in the notes to the financial statements prepared in accordance with IFRS of many companies are similar. However, some companies highlight specific features related to their core business. Each analysed company, in addition to the accounting policy, discloses in detail in the notes those accounting items that best characterise its business activities. It was found that some of the analysed companies in their accounting policies for fixed assets do not comply with the minimum terms of their use provided for by the Tax Code of Ukraine, which leads to misstatement of financial statements. From year to year, the number of Ukrainian companies preparing financial statements in accordance with international standards is increasing due to legal requirements or business motives: entering the foreign market, searching for and attracting foreign investors, establishing joint ventures, etc. Financial statements prepared in accordance with IFRS allow for a broader presentation of information about the company's activities, in particular, by using a taxonomy and expanded presentation of information about the company's activities in the notes.