Value Of Pensions Research Articles

Delayed payment of gratuity, pension, and post-retirement conditions

The value of retirees' gratuity and pension will continue to grow as individuals reduce their reliance on family members to care for them in old age and accept the truth that they must care for themselves by saving for the future. Benefits for retirees have piqued the interest of policymakers and experts worldwide. Numerous articles have been written to assess Nigeria's previous pension system, the reasons for its failure, the shortcomings of the new pension system, and the influence of both the old and new pension systems on pensioners' wellbeing in Nigeria. Nonetheless, no study exists in Nigeria on the effect of delayed gratuity and pension payments on post-retirement situations. To close this divide, this study explores the effect of delayed gratuity and pension payments on retirees' willingness to keep their current position in Nigeria. This study analyzed secondary data obtained from published and unpublished books, journal articles, and online sources. It used content analysis to determine the relevance of the material collected to the study's scope. The study shows that delayed gratuity and pension payments contribute to pensioners' diminishing status, deteriorating health, and premature mortality shortly after retirement. The study consequently suggests that both public and private employers of labor do regular pre-retirement training for their employees to avoid the shame of seeing their retirees become penniless on the streets or succumb to an early death shortly after retirement.

Bauer and Beyond: The Changing Interpretation of Article 8 of Directive 2008/94/EC and Its Impact on EU Member State (and UK) Pension Protection Arrangements on Employer Insolvency

In this article, the interpretation of the Court of Justice of the European Union (ECJ) of Article 8 of Directive 2008/94/EC (protecting employee pension rights on employer insolvency) (‘Art. 8’) over the last 14 years is reviewed. In six cases the ECJ has ruled on the correct transposition of Article 8: Robins, Hogan, Webb-Sämann, Hampshire, Bauer and TMD. Initially the ECJ decided that Article 8 required a 50% minimum level of protection of the value of pensions. This raised a lot of further questions. More recently it decided, in Bauer, to add a further underpin based on the Eurostat at-risk-of-poverty threshold. The Bauer decision, in the authors’ view, makes two possible errors, discussed in this article, which might create legal uncertainty as to how the additional underpin can, in practice, be administered. The Bauer underpin was unforeseeable and suggests possible (excessive) judicial activism. Our review of the Article 8 ECJ case law identifies continuing gaps in compliance in the UK (the lack of protection for unfunded pension schemes) and in the Netherlands (if an employer has agreed to provide additional funding to make good benefit shortfalls). In contrast, we identify that Article 8 does not require the protection of early retirement benefits (or invalidity benefits) in contrast to the ECJ decision in Beckmann. We discuss the use, in an English case (Hughes), of an age discrimination argument to remove a compensation cap in the UK Pension Protection Fund (PPF) for those below normal pension age using Article 21 of the EU Charter of Fundamental Rights and Article 14 of the European Convention on Human Rights. Our review may help identify potential areas of noncompliance with the transposition of Article 8 in other Member States.

Recent trends in wealth inequality among older Americans in two surveys.

We document changes in wealth inequality across American households with a member aged 55 or older, comparing data in the Health and Retirement Study (HRS) with that in the Survey of Consumer Finances (SCF) between 1998 and 2016. We examine net wealth including housing, financial and nonfinancial assets and debt, without the cash value of insurances, DB pensions or Social Security wealth. We find very similar distributions of net wealth in the two surveys between the 25th and 90th percentiles, but substantially higher wealth in the SCF at the top of the distribution. Both surveys show an increase in wealth inequality between 1998 and 2016, first mostly due to increased wealth at the top, and, after 2012, due to an increase in the share of households with very little wealth as well. Both surveys agree that wealth inequality by education and race, already substantial in 1998, increased further by 2016.

Fair and balance rate for benefits not scheduled in defined contribution plans

ABSTRACT The objective of this study is to propose a methodology that, using multiple decreases, in addition to classified by actuarial profile and source of social security costs, calculates actuarially fair and balanced rates for unscheduled collective costing benefits from Defined Contribution (DC) pension plans. There are no studies in Brazil about costing rates for benefits not scheduled in pension plans of the DC modality. Any institution that pays collective cost social security benefits must determine an actuarial rate that is not insufficient, generating a financial imbalance in the fund, nor excessive, compromising the participant’s income. This work is the first study on costing rates for collective costing benefits from pension plans with DC modalities. Actuarially fair rates are obtained considering multiple decreases and equalizing the present value of contributions and the present value of pension and disability benefits, classified by actuarial profile and source of social security cost. The specific balance rate is determined for each source of social security costs and is obtained considering the actuarially fair rates for each actuarial profile. The general balance rate is obtained by the marginal contribution of each specific balance rate. The proposed methodology was used to calculate the rates of unscheduled benefits with collective costing in DC modality plans. The proposed methodology estimated that the legal changes, resulting from Constitutional Amendment 103/2019, indirectly increased by more than 4% the general balance rate of the unscheduled benefits of the Supplementary Social Security Foundation of the Federal Public Servant of the Executive Branch of the Federal Government (FUNPRESP-Exe).

The perfect storm of personal consumption

The COVID-19 pandemic forced the governments of almost all countries to introduce lockdowns in 2020, which sharply reduced the supply in a number of large service sectors: transport, recreation, catering, tourism. The recession began without a crisis, and the unique supply of cheap money and fiscal incentives prevented the development of a “liquidity crunch”. On the contrary, it led to an increase in stock prices, real estate prices, and a reduction in bankruptcies. There was no drop in the value of pension and investment funds. The working population has faced a reduction in employment in labor-intensive service industries, a violation of traditional lifestyle models. The course of the recession in these conditions has changed the structure of personal consumption in developed countries, with its severe adaptation in medium-developed and less developed countries. The pandemic and the recession have caused an uneven compression of activity and consumption across social strata that leads to an increase in social disparities on exiting the recession. The drivers of the demand-side recovery in developed countries are the growth of investments in housing and durable goods, and developing countries are gradually restoring normal consumption of non-durable goods and exports.

Golden Handcuffs and Corporate Innovation: Evidence from Defined Benefit Pension Plans

Abstract This study examines the relation between employee incentives and corporate innovation. We find that firms with a higher defined benefit (DB) pension value secure more patents and patent citations. We further show that pension freezes, which stop the accumulation of pension obligations, negatively affect innovation outcomes. The value of a DB plan enhances innovation by motivating employees to produce higher output and through loyalty. However, pension deficits impede innovation because of the nature of inside debt. Overall, our findings call for a fresh look at pensions by policy makers and practitioners, given the historic shift away from DB plans. (JEL G31, G32, O31, O32).

DAVLAT IJTIMOIY SIYOSATINI AMALGA OSHIRISHDA PENSIYA TA’MINOTI TIZIMINI TUTGAN O’RNI

Timely financing of pensions and social benefits in Uzbekistan will provide stable income for development of the financial and economic markets. In this article the theoretical value of pensions is defined, the social advantage of pensions reveals, organizational and legal bases of development of pensions are explained and also financial resources of pension systems are analyzed

Spanish Minimum Pensions after the 2013 Pension Reform

In this article we explore the consequences of exempting minimum pensions from the Pension Revaluation Index (PRI) introduced by the 2013 reform of the Spanish pension system and making their real value a constant share of per capita output instead. We find that this change essentially implies trading-off higher minimum pensions against a lower PRI -which reduces the real value of all other pensions- and against the higher consumption tax rates that are needed to finance them. When faced with these trade-offs, the optimal responses of the households in our model economy are to work shorter hours, to retire earlier, and to save less. They also consume less to avoid paying some of the higher consumption taxes. All this implies that preserving the real value of minimum pensions makes the growth rates of output smaller. We also find that this change compresses the range of pensions, and that as many as 48 percent of the retirees in our model economy collect the minimum pension in 2050. This share is 28 percentage points higher than the share of 2010. It also implies that pensions are more equally distributed because the bottom tail of the pension distribution collects a larger share of the total. Finally, we find that preserving the real value of minimum pensions brings about large welfare gains.

Stochastic utilities with subsistence and satiation: Optimal life insurance purchase, consumption and investment

We introduce stochastic utilities such that utility of any fixed amount of interest is a stochastic process or random variable. Also, there exist stochastic (or random) subsistence and satiation levels associated with stochastic utilities. Then, we consider optimal consumption, life insurance purchase and investment strategies to maximize the expected utility of consumption, bequest and pension with respect to stochastic utilities. We use the martingale approach to solve the optimization problem in two steps. First, we solve the optimization problem with an equality constraint which requires that the present value of consumption, bequest and pension is equal to the present value of initial wealth and income stream. Second, if the optimization problem is feasible, we obtain the explicit representations of the replicating life insurance purchase and portfolio strategies. As an application of our general results, we consider a family of stochastic utilities which have hyperbolic absolute risk aversion (HARA).

The Economic and Financial Costs of Climate Change in Small Island Developing States: Assessing the Effect of Hurricanes & Tropical Storms on Stock and Foreign Exchange Markets in Jamaica

During the year 2017, hurricanes Irma and Maria wreaked havoc in the Caribbean and severely disrupted entire societies. This study extends the literature on the impact of climate change on Small Island Developing States by investigating the impact of hurricanes and tropical storms on stock and foreign exchange markets in Jamaica. The study finds that in a majority of cases, the passage of hurricanes and tropical storms lead to significant losses on Jamaica’s stock and foreign exchange markets, and in some cases, exceed the widely reported losses from damage to property and infrastructure. The implication is that failure to account for financial market losses can significantly understate the economic and financial impact of natural disasters. The results reinforce the vulnerability of Small Island Developing States like Jamaica to natural disasters and provide another dimension to the scale of the negative impacts of climate change on these nations. The findings also suggest that measures to mitigate the effects of climate change and natural disasters not only minimize loss of life, property and infrastructure, but may also serve to protect the value of pensions and other investments held in the stock market, as well as help maintain the stability of the currency.

SOCIAL AND PHYSICAL PROBLEMS RELATED TO THE LOW INCOME OF PENSIONERS AND THE MEANS OF SOCIAL, PSYCHOLOGICAL AND ENVIRONMENTAL ADJUSTME NT WITH THEM

The objective of the study was to investigate the social and physical problems related to the low income of the pensioners and the means of social, psychological and environmental adjustment with them. the social and physical problems of the low-income pensioners. Identifying the social, psychological and environmental adjustment methods for the pensioners. (58) Males (58) Females Use the descriptive approach and the methodology Social survey and tools Questionnaire form Questionnaire for social and physical problems Researchers'' preparation, adaptation Meeting The results of the study were as follows: 1. There was a statistically significant inverse relationship at the level of (0.05) between the social problems and the pension value of low income pensioners.) Between the tribal application and the post-application of the experimental group in the psychological flexibility as a whole and all its dimensions (the ability to form social relations with others, the ability to control the emotions, the ability to make decisions and planning to solve problems) in favor of the application of dimension and life. There is a statistically significant inverse relationship at the level of (0.01) between the physical problems and the pension value of low income pensioners. The results also indicated the level of social adjustment among low-income pensioners with an average weighted average (1.90) and weighted average (63.17%) based on the three-fold weighted weight scale. This means that the level of social adjustment in the study sample (low-income pensioners). The study recommends: The attention of the officials of this segment through the provision of assistance and aid to them in various areas of life. Addressing the concerned ministries, civil society organizations and families to the problems of the elderly and providing appropriate practical solutions. Expansion and attention to the establishment of nursing homes for the elderly to take care of the elderly who suffer from lack of shelter or lack of interest and care for his childre

Golden Handcuffs and Corporate Innovation: Evidence from Defined Benefit Pension Plans

This study examines the relation between employee incentives and corporate innovation. We find that firms with a higher defined benefit (DB) pension value secure more patents and patent citations. We further show that pension freezes, which stop the accumulation of pension obligations, negatively affect innovation outcomes. The value of a DB plan influences innovation by motivating employees to produce higher output and through loyalty. However, pension deficits impede innovation because of the nature of inside debt. Overall, our findings call for a fresh look at pensions by policy makers and practitioners, given the historic shift away from DB plans.

DESIGUALDADE DE RENDA NO BRASIL: A INFLUÊNCIA DO DIFERENCIAL PÚBLICO-PRIVADO, APOSENTADORIAS E PENSÕES

O trabalho investiga o impacto do diferencial nos rendimentos dos trabalhadores do setor público e privado e do diferencial do valor de aposentadorias e pensões superiores ao teto do Regime Geral de Previdência Social (RGPS) sobre a desigualdade de renda. Para tal, utilizam-se o método de decomposição do Índice de Gini, proposto por Lerman e Yitzhaki (1985), e os dados da PNAD do período entre 2004 e 2013. Os resultados apontam que a elevada remuneração dos funcionários públicos foi responsável, em média, por 2,84% da desigualdade de renda no período. Os rendimentos de aposentadorias e pensões oficiais acima do teto foram responsáveis por 1,66% do total do Índice de Gini. Por meio da decomposição foi possível verificar que as parcelas de rendimento atreladas a empregados com maior qualificação são mais regressivas do que as referentes à empregados com menos escolaridade. Outra constatação importante foi a tendência crescente do hiato público-privado, ao longo do período investigado, motivada principalmente pelo crescimento médio real superior dos rendimentos do funcionalismo público em comparação ao privado. Em relação aos rendimentos de aposentadorias e pensões a desigualdade de renda foi atenuado pelo menor crescimento real dos rendimentos acima do teto da RGPS.

Pension Goals and Institutional Arrangements: Reforms DC 2.0 for Latin America

The pioneering pension reforms that brought a market for individual defined-contribution (DC) pension accounts to some Latin American countries in the 1980s and 1990s have failed to gain widespread social legitimacy. Such systems do not cover everyone, and the market design and regulatory infrastructure are not geared towards achieving the objective of maximizing the value of pensions. This failure stems from a combination of flaws in the fundamental design of the investment regime, which is highly regulated and focused on short-term outcomes, and of misaligned incentives of the firms operating in a market that is not conventional due to consumer inertia and other forces that limit competition. The contribution of this paper is twofold: (i) first and foremost, to define a new paradigm for the investment regime, with long-term features to target pension goals; (ii) second, to discuss in parallel changes in the design of the market that are needed for implementing such goal-based investment approach. By delineating few principles for ensuring competition in lifelong investing, we identify research and policy questions that require further work for clarifying how to pursue needed reforms. Given the technical and political barriers to implementing all these DC 2.0 principles in different country contexts, the paper seeks at the very least to establish a framework for framing discussions about future pension reforms in the region.

Neoliberalism and the recommodification of health inequalities: A case study of the Swedish welfare state 1980 to 2011.

This paper examines the effects of neoliberalism on health inequalities through an empirical examination of the recommodification of the social determinants of health. It uses a detailed case study of changes to three specific welfare policy domains in Sweden: unemployment, healthcare, and pensions. Using time series data from the repeat cross-sectional Swedish Living Conditions Survey for 1980-2011, it examines: (1) the effects of reductions in the replacement rate value of unemployment benefit on inequalities in self-reported general health between the employed and the unemployed; (2) the effects of reductions in the replacement rate value of pensions on educational inequalities in self-reported general health among pensioners; and (3) the effects of the increase in user charges on inequalities in having visited a doctor in the past 3 months by educational level. The results suggest mixed effects of welfare state recommodification on health inequalities: inequalities increased between the Swedish employed and unemployed, yet they did not increase in the retired population, and inequalities in access to healthcare also remained steady during the study period. The paper concludes that the association between recommodification and health inequalities in Sweden is stronger regarding unemployment benefits than pensions or healthcare, and that this may relate to the stigmatisation of the unemployed.

CEO's Compensation: A Tool to Augment Corporate Governance to Achieve Optimal Level of Corporate Social Responsibility

In this paper we used components of executive compensation namely bonus, value of options granted, and value of pension accumulated for executives from Wharton Research Database to drive conclusion regarding implications of how such short term (bonus) and long term (value of options granted and value of pension accumulated) incentives play a role in determining the level of Corporate Social Responsibility (CSR) ratings among firms. Our results suggested that contracting executive compensation schemes based on long term incentives would tend to favor firms’ level of Corporate Social Responsibility while designing optimal contracts based on short term incentives could be more of an agency cost to firm in terms of level of CSR ratings.

Obesity and the Public Purse: Weighing Up the True Cost to the Taxpayer

This is the first study to estimate the annual savings that overweight and obese people bring UK taxpayers by dying prematurely (in 2016 prices). Ignoring these savings leads to substantial overestimation of the true burden of elevated body mass index (BMI) to the taxpayer. Our estimate of the present value of pension, healthcare and other benefit payments avoided through early, BMI-caused deaths (net of foregone tax payments) is £3.6 billion per annum. This paper argues the ‘burden-on-the-taxpayer’ narrative, propagated by public health campaigners, is overblown. While claims of a crippling cost are a good way to get media attention, especially during a time of slow motion crisis in the NHS, they irresponsibly incite resentment of a vulnerable group. The net cost of overweight and obesity to the government is calculated by subtracting £3.6 billion from an estimate of the healthcare and welfare costs. This paper estimates the net cost at £2.47 billion, which is 0.3 per cent of the UK government’s total budget in 2016 or 1.8 per cent of the NHS budget in the same year. An estimated 7.1 per cent of deaths (35,820) are attributable to elevated BMI in England and Wales in 2014. Each individual lost 12 years on average. To produce our estimate of the savings, we constructed a counterfactual in which all those who died prematurely from BMI-attributable deaths in a year were resurrected and allowed to live out average lifespans, incurring costs to the government and paying taxes at typical rates. The projected financial flows were discounted at a three per cent rate to get the present value of the cost associated with the extra life years. The average government spending on a retiree, net of taxes, is £10,947 per annum. The relationship between the present value of government savings (y-axis) and the age of the deceased (x-axis) is roughly an upside-down parabola. The death of a 40-to-54 year old is only worth £11,100 to the government, because foregone years of net contribution must be subtracted from the savings. At the apex of the parabola are 65-to-74 year olds, whose deaths are worth £166,000 per head to the Treasury. The 90+ age group brings in £32,000 per death.

The Financial Impact of Natural Disasters: Assessing the Effect of Hurricanes & Tropical Storms On Stock Markets in the Caribbean

This study uses the event study methodology, corrected for the impact of thin trading, to investigate the economic and financial impact of hurricanes and tropical storms on small island developing states. The study investigates the stock market impact of all hurricanes and tropical storms to make landfall in the Bahamas, the Eastern Caribbean and Jamaica over the period January 1 2001 to June 30 2015. The results indicate that major hurricanes that make landfall in Jamaica generate stock markets losses that can be ten times greater than the widely reported losses from damage to property and infrastructure. The implication is that failure to account for capital market losses significantly understates the economic and financial impact of natural disasters. The results reinforce the vulnerability of Jamaica to natural disasters and provide another dimension to the scale of the negative impacts of climate change on small island developing states. The findings also suggest that measures to mitigate the effects of natural disasters not only minimize loss of life, property and infrastructure, but may also serve to protect the value of pensions and other investments held in the stock market. Despite a number of highly destructive storms making landfall in the Bahamas and the Eastern Caribbean, the passage of these storms had no direct impact on the Bahamas Stock Exchange or the Eastern Caribbean Stock Exchange. Therefore, investors in these two markets did not suffer any losses that could be directly traced to the passage of hurricanes and tropical storms. However, this finding should be interpreted with caution as the absence of any stock market impact may be more reflective of the workings of those stock markets than the economic and financial significance of the impact of the storms.

Deferred compensation withdrawal decisions and their implications on inside debt

Deferred compensation constitutes a significant portion of inside debt. Unlike pension plans, deferred compensation can be vested before retirement. If entrenched CEOs take advantage of this attribute of deferred compensation and withdraw it when the firm is in financial distress, the beneficial roles of deferred compensation as a tool for aligning the CEO's interests with those of debtholders are undermined. Moreover, there would be a need to reexamine existing empirical studies in this area which obtain the amount of inside debt by simply adding the monetary value of pension and deferred compensation. This study examines whether deferred compensation can serve as inside debt in real world practices. Using a large sample of S&P 1,500 firms, I find that entrenched CEOs tend to restrict the decision of deferred compensation withdrawal in order to protect debtholders’ value when a firm's distress risk is significant. Therefore, deferred compensation serves as an important alignment role with debtholders in spite of the existence of withdrawal flexibility.

Workplace pensions and remuneration in the public and private sectors in the UK

We estimate the changing value of workplace pensions in the UK and incorporate their value into an estimate of the public sector pay differential. Falling pension membership in the private sector and growing value of public service pensions led to a significant increase in the estimated public sector pay differential from 1997 to 2009, even though headline pay grew faster in the private sector. From 2009 to 2012, although pay grew faster in the public sector, reforms to public service defined benefit pensions, particularly indexation to the CPI rather than RPI, significantly reduced the public pay differential.