Retirement Rules Research Articles

The impact of retirement on loneliness in Europe

AbstractThis article investigates the short- and long-term impacts of retirement on loneliness using panel data from the Survey of Health, Aging, and Retirement in Europe. To identify causal effects, we exploit differences in retirement rules across and within countries and use retirement thresholds in an instrumental variable setting. On average, we find that entering retirement leads to a reduction in loneliness in the long run and no clear effect in the short run. The reduction is driven by individuals being less likely to feel socially isolated and lacking companionship. Our results suggest that individuals adapt to retirement by increasing their activity levels and reap the benefits in terms of reduced loneliness and social isolation. The heterogeneity analysis shows that this is particularly true among the higher educated. The heterogeneity analysis also reveals that retirement increases feelings of loneliness for women in the short term and that the effect seems to be driven by women lacking companionship when their partner is not yet retired.

Optimizing community science contributions in ecology: A case study on Zooniverse's ‘Chicago wildlife watch’

Public participation in research, or community science (CS), has an important role in advancing ecological research, especially data processing. CS contributions to camera trap studies have supported wildlife conservation through the rapid processing of images and videos. However, more studies are needed to quantify the accuracy and efficiency of CS participation. We used a case study from Chicago Wildlife Watch, a Zooniverse project, to explore variability in image classification accuracy and assess efficiency of responsive retirement rules which dictate how many times an image is viewed and annotated. We found that CS participants were highly accurate when classifying empty (96.0 %) and commonly photographed species in our study area (60.14 % across all species). User agreement on species images most impacted classification accuracy, though accuracy was higher for those containing larger species and those annotated by more engaged participants. With respect to efficiency, we found that three consecutive ‘empty’ classifications from participants led to over 95 % classification accuracy in empty images and if 7 participants agreed on a species present in an image, they were accurate 98 % of the time, on average. These results further support the value of CS in ecological research and the value of applying unique project designs which consider occurrence of regional species and field systems (e.g. camera placement or ecosystem). Given these results, we encourage scientists to continue applying quantitative techniques to custom design projects to effectively use CS participants' time and maximize data accuracy.

Pension policies and early retirement: New evidence from a counterfactual analysis in Iran

AbstractCompared to the global average, the exit rate of old-aged Iranian labourers is significantly higher than that of middle-aged, raising the hypothesis that social security generosity pulls older workers into early retirement. We used a unique individual dataset of Iran’s Social Security Organization (ISSO), including 267, 000 newly retired in 2016 and 2018, to assess the impact of ISSO’s pension policies on employees’ retirement age. In a counterfactual evaluation design, this study first estimated the implicit tax on work continuation and then applied the Heckman two-stage selection model. The findings show that ISSO’s retirement rules determining the age of exit and benefit eligibilities significantly increase the retirement probability and simultaneously decline the retirement age. Moreover, the implicit tax on work continuation, which reflects ISSO’s benefit formula, has a significant positive effect on retirement probability. The replacement rate also has a significant negative impact on retirement age. The retirement probability in hazardous jobs is higher than in normal ones, while exemptions significantly fall the outflow age of hazardous job holders. To maintain the scheme’s sustainability, reforms have to target an increase in the statutory retirement age, a reduction in the accrual rate, the calculation of reference salary for more extended periods, and the decline of the exemption coefficient for hazardous jobs.

Aging, education and some other implications for the silver dividend in developing countries: Evidence from Brazil

Population aging increases dependency levels and can influence the transition from working life to retirement. Changes in population structure have important economic effects, which can be positive when analyzing the impacts of a more educated older labor force but could also impact families and governments. It is important to consider how age and education composition are associated with each other in contexts marked by high levels of inequality. In this paper, we analyze the economic consequences of the aging process in Brazil considering the role of improvements in education and the possibility of the constitution of a silver dividend in the country. We use a series of simulation models, based on the determinants of labor supply and labor income of people aged 45 years and over, to investigate the impacts of changes in the educational composition of the labor force. Our simulations show that the positive association between education, labor supply, and labor income would be more pronounced in scenarios of higher levels of education, labor market stability (high status activities and informality reduction), and changes in retirement rules, specifically the establishment of minimum ages. Such a context would increase the number of older workers and improve productivity, allowing appropriate conditions for the development of a silver dividend in Brazil in a quantitative and a qualitative way.

Time to Retire: The 4% Withdrawal Rule

The so-called “<i>4% rule</i>” is perhaps the single most commonly referenced retirement withdrawal approach. Most discussion of this rule centers on the appropriate percentage to use, 4%, 3%, or 5%. My objective is to suggest a superior retirement rule. Superior in the sense that it will deliver a higher standard of living during one’s retirement years. I start with the observation that past retirement withdrawal analysis suffers from two key deficiencies, that is, a reliance on past US stock and bond market returns (ex-post cherry picking the best performing market) and an assumption that asset class returns can be modeled with independent and identically distributed random variables, serving to mask their important time series properties. This article repairs these two deficiencies. A new retirement distribution rule is proposed. One that distributes/liquidates an ever-increasing proportion of the retiree’s then-current portfolio as they age, but subject to a minimum monthly distribution expressed in dollar terms. This approach provides simplicity, ease of execution, and transparency. It also results in a standard of living for the retiree as expressed by the median and average monthly distributions that are 101.3% and 174.2%, respectively, above those delivered by the best possible constant-dollar withdrawal rule. This pleasing result occurs for two primary reasons. First, this new rule realizes significant benefit from selling more/less shares when markets are high/low (which is the exact opposite of what transpires with all constant-dollar rules). Or to use other words, it delivers a measurably higher IRR despite utilizing an identical asset mix. Second, the new rule effectively consumes the retiree’s entire portfolio over the retirement life, leaving no unused residual balance (again, the exact opposite of all constant-dollar rules).

Within-party mobility and economic performance in authoritarian regimes: Evidence from China

This study analyses a mechanism to explain how internal mobility in the dominant party enhances economic performance. We argue that authoritarian leaders incentivize their political agents to advance economic development by using age-based promotion and retirement rules. We empirically examine our theoretical claim using China’s cadre rejuvenation policy, which rewards younger leaders with more opportunities for career advancement. Drawing on panel data for prefectural party secretaries who were in office at some point between 2000 and 2012, we show that the principle of youthful rejuvenation leads the Communist Party of China to grant more promotions to party leaders who enter office at a younger age than to their older counterparts. Under such an incentive scheme, the regions served by younger entrants into the officialdom have better economic performance than those served by older entrants, holding ability and other regional characteristics constant.

The 24-hour retirement rule for NHS dentists.

The 24-hour retirement rule for NHS dentists.

The pensions system in Italy: a continuous reform

The retirement rules reform of 2011 continues the reforms effort started in the 1990s, particularly in the pension calculation. It also introduces an essential parameter for access to retirement, that of life expectancy. The determination to harmonize and rationalize the pension system was however subsequently prevented by the introduction of numerous exemptions. The essay emphasizes the heterogeneous criteria underlying these derogations and critically questions the parameter of life expectancy, wondering if it produces inequalities between workers.

Life expectancy inequalities and their evolution in Italy. How these impact on the equity of the pension system?

Abstract The article aims to present the most recent evidence on the life-expectancy differentials across socio-economic groups in Italy and discuss their implications in terms of equity and fairness of the pension systems. In fact, Italian pension rules are set according to average life expectancy, ignoring the shorter life expectancy at retirement observed in more disadvantaged socioeconomic groups, as well as in many occupations and economic sectors. This produces unintended consequences in terms of redistribution, which reinforce and exacerbate inequalities present in the labour market. This article will present updated evidence on the evolution of life expectancy inequalities across job titles, sectors and occupational class in Italy to assess whether the social gap, already highlighted by previous scholars, has been widening or narrowing. Only a few studies are available in the literature on this subject, almost exclusively from the US, which suggest that the gap in terms of life expectancy at ages approaching retirement is increasing, mainly driven by a faster improvement in longevity across most advantaged groups. It is crucial to examine the trend in a country like Italy where retirement age has been strongly tightened and linked automatically to average life expectancy in the population. These results may be important in order to inform the public debate about future reforms on retirement rules and in particular for the definition of the so called “arduous and hazardous jobs” (in Italian: lavori gravosi), that could be exempted from the postponement of pension age. In order to estimate life expectancy differentials among different occupations, three of the largest Italian longitudinal studies will be used: the Turin Longitudinal Study (SLT), the Italian Longitudinal Study (SLI) and WHIP-Health Study, all studies where it is possible to conduct mortality follow-up through administrative record linkage with archives of mortality of large cohorts until recent years.

The heterogeneous effect of retirement on informal care behavior.

It is often argued that the increased labor market participation of seniors threatens family support provided to dependent elderly people. The purpose of this paper is to assess the causal effect of retirement on the frequency of care provided by individuals aged 55-69 years to their elderly parent. Using data from the Survey of Health, Aging and Retirement in Europe (SHARE), we estimate an endogenous switching model that allows the retirement effect to be heterogeneous with respect to observed and unobserved characteristics. To tackle the possible endogeneity of selection into retirement, we use the heterogeneity of retirement rules between and within European countries. On average, being retired does not significantly impact the probability of providing care but significantly increases the frequency of care conditional on being caregiver. The same pattern is observed regardless of the individual observed characteristics, even if the provision of informal care appears to be less sensitive to the retirement status when the child cannot rely on the other parent to provide care or when both parents are in poor health. These results suggest that pension system reforms should not affect the number of caregivers. Some adverse effects on the intensity of involvement among caregivers are nevertheless expected.

Retirement and Healthy Eating.

This paper investigates the effect of retirement on healthy eating using data drawn from the Survey of Health, Ageing and Retirement in Europe (SHARE). We estimate the causal effect of retiring from work on daily fruit or vegetable consumption by exploiting policy changes in eligibility rules for early and statutory retirement. Our results show that changes in eating behaviour upon retirement are gender‐specific: retirement induces men to reduce healthy eating; it has no effect on women. We further show that, for men, retirement increases the probability of becoming obese.

Saving for Retirement Rules of Thumb Saving for Retirement Working Party - Abstract of the London Discussion

Saving for Retirement Rules of Thumb Saving for Retirement Working Party - Abstract of the London Discussion

Special issue of MAPS in honor of Wolf Uwe Reimold on occasion of his 65th birthday

Special issue of <i>MAPS</i> in honor of Wolf Uwe Reimold on occasion of his 65th birthday

Public Servants’ Response to the Terms and Conditions of Retirement in Uganda

Upon joining a firm, employees often find terms and conditions of retirement. They work for a wage, proportion of which is deferred into the future as retirement benefits; only accessed after some regulations have been fufilled. This paper uses a descriptive strategy to examine how employees in the public service in Uganda respond to the retirement conditions (mandatory age of exit, and minimum years of service), while measuring response to retirement conditions in binary form (voluntary early retirement, and retirement at age 60). Using data on retirees from the Pension Department of the Ministry of Public Service, results show that majority public servants in Uganda positively respond to the retirement rules. Majority retire at the statutory mandatory age. Moreso, the female employees, teachers, those not married, and those in upper salary scale. Also, there is an observed sharp strike in retirement at10 on the bar chart, after clocking the minimum years of service, a pointer to the early retirement condition. Such a response, particularly, by the different socioeconomic states of retirees, has implications on labor supply policies in the country.

Pathways to Retirement, Well-Being, and Mandatory Retirement Rules: Evidence from Canadian Reforms

Amid the aging workforce, a better understanding of the retirement transition patterns of older workers has implications for public policy. Such transitions are often characterized as complex trajectories involving multiple stages and alternative pathways which, in turn, depend on labor market regulations. This study investigates the factors affecting bridge employment and partial retirement and their subsequent effects on health, well-being and financial security, using micro-level data from a national healthy aging survey and augmented with personal income tax records. The analysis exploits policy-induced changes in retirement status arising from the elimination of mandatory retirement rules in Canada—which occurred at different times across provinces—in an instrumental variables design. The results indicate, first, that mandatory retirement is not used often by employers even when it is permissible: only approximately 7% of current retirees report that their first retirement occurred for this reason. This finding is consistent with limited international evidence on how employers use these rules. Second, we find supportive evidence that the elimination of mandatory retirement reduced the likelihood of individuals being retired by approximately 7–16% but raised the likelihood of subjective partial retirement by 5–6%. Most notably, the reforms reduced the incidence of work after retirement as workers become permitted to stay in their incumbent jobs longer, this finding being very robust across several statistical estimators commonly used in the related literature. No discernible effects are observed on individuals’ health, well-being or future financial security. These findings suggest that costs of mandatory retirement are limited to adjustment frictions among individuals searching for new work or entering retirement earlier than desired under the prevailing wage.

Previdência Social no Brasil: uma análise socioeconômica acerca da Proposta de Emenda à Constituição 287

De competência do poder público, a Previdência Social no Brasil é administrada pelo Ministério do Trabalho, sustentada, principalmente, pelas contribuições ao Instituto Nacional do Seguro Social (INSS). A Reforma Previdenciária se apresenta como uma proposta de emenda à Constituição (PEC 287/2016), em tramitação desde 2016, propondo drásticas alterações no sistema previdenciário brasileiro, remodelando as regras para aposentadoria, em virtude da crescente redução da população trabalhadora ativa. A reforma apresenta, porém, pontos questionáveis em relação à sua eficácia, assim como pode desencadear, no futuro, um aumento no índice de pobreza entre os idosos. O presente trabalho objetiva realizar uma análise crítica envolvendo o contexto atual através de algumas opiniões de especialistas, gerando assim uma reflexão e auxiliando no aprofundamento do conhecimento diante a proposta de reforma do governo. Conclui-se, então, que a solução não é cortar gastos, mas investir em formação profissional, educação e inovação. Assim, a receita para cobrir os gastos com a Seguridade Social virá de uma população trabalhadora ativa, aumentando a produtividade do país.

An Attempt to Identify Factors Influencing Retirement Decisions in Poland

Discussions on how to prevent negative economic consequences of ageing of societies have resulted in the reforms that should prolong labour market participation and postpone retirement of longer living generations. Pension systems are among those reformed most frequently. Also in Poland – since the beginning of economic transformation in the early 1990s – retirement rules have changed many times. Pre‑retirement benefits and allowances have been introduced to help those who became unemployed at an older age. Since 2009 early retirement is not possible any more (with some exceptions), the standard retirement age continued to increase since 2013 and then it decreased again in 2017. The aim of the paper is to analyse the driving forces of retirement in Poland. Such knowledge is important to develop proper policies and expectations about labour supply decisions. We have analysed what factors influenced retirement decisions in the last decade, with a special focus on pension system regulations. The main data sources used in this paper are Labour Force Survey (BAEL) data for the years 2005–2016 and the Social Insurance Institution statistics. Probabilities of retirement from the labour force were presented and discussed. Then, individual BAEL data for persons aged 50–74 in the years 2013–2016 were used to estimate logistic regression models of odds of labour market inactivity. The results show that education or health status are significant factors influencing retirement decisions in Poland. Additionally, older workers react to economic incentives for retirement created by the pension system, mainly the retirement age.

The effects of institutionalization in China: A difference-in-differences analysis of the mandatory retirement age

This study takes advantage of a “natural experiment” to show how institutionalization shapes economic outcomes in China. Beijing introduced the mandatory retirement age for provincial leaders in the 1980s, but the rule was not enforced across all provinces until 2000. I use this window to construct a difference-in-differences design and show how the enforcement of mandatory retirement rule leads to better economic outcomes. Provincial leaders eligible for promotion are now motivated to perform better on growth in order to succeed under the performance-based promotion system. But this institution is not perfect, as it results in poorer performances among lame-duck leaders near the retirement age. I also find that leaders with central connection tend to have worse performances. This suggests that when politicians have connection with the center, they hold the key to promotion already, so they do not need to worry about the Chinese-style yardstick competition.

The Intergenerational Effects of Political Influence: Evidence from China

This paper considers the effects of fathers’ political influence on their offspring’s labour market outcomes in China. Political influence refers to the ability to convert political power into economic benefits. This study identifies the dissolution of political influence by exploiting an age-based mandatory retirement rule in urban China. It exploits the variation of political influence in three dimensions: bureaucrat status, retirement status, and offspring gender. A difference-in-differences approach shows that the retirement of a bureaucrat translates into a 13 per cent decrease in offspring’s income. A triple-differences approach suggests retirement of a bureaucrat father translates into a 27 per cent decrease in earnings among sons. Retirement of a bureaucrat father is associated with larger income losses for offspring working in the same industry sector as their father and in industries that have a high concentration of assets or that are controlled by the state. This paper adds evidence to the growing literature estimating the economic benefits of political connections.

The Department of Labor Fiduciary Rule: Likely Impact on Securities Arbitration and Litigation Claims

There is considerable uncertainty during the transition period pending DOL review of the Obama-era fiduciary rules for retirement accounts. During this period, advisers who do not receive level-fee compensation are held to the DOL impartial conduct standard for retirement accounts, but are not required to enter into best interest contracts for commission-based compensation. Under these impartial conduct standards, advisers are required to make recommendations in the retirement investor’s best interest, charge reasonable compensation, and avoid misleading statements. Additional requirements, including the proposed best interest contract requirement, and web-based disclosure are deferred to July 2019 and are under review by the DOL. An additional wildcard, as if one was needed, involves what role, if any, the SEC elects to assume and whether the Commission accepts Secretary Acosta’s invitation to participate in the regulatory process. Up to this year, the momentum has been toward adoption of a fiduciary standard and it remains to be seen whether the current DOL under Secretary Acosta has the motivation to quell that trend. In the interim, the DOL impartial conduct standards are likely to result in more litigation and arbitration, and a higher success rate for investors’ representatives. If and when the BIC exception goes into effect, these claims will include breach of contract. Even under the impartial conduct standards in effect now, these additional claims may include and be based upon a variety of theories, including, (a) “reverse churning” in which fee-based accounts are utilized for low-activity customers; (b) failure to properly document a rollover from an ERISA account to a fee-based IRA; (c) firm compensation based on quotas and bonuses which create incentives contrary to the customer’s interest; (d) compensation grids which incentivize advisers to engage in more active trading; (e) purchase of class A mutual funds or other securities with front-end commissions which are subsequently moved into an advisory account. As mentioned, an increase in the number and types of claims can be anticipated with the advent of fiduciary rules. Whether and to the extent the Best Interest Contract exemption takes effect will become apparent as the implementation date approaches.