Between 2007 and 2009, the percent of 62 year olds claiming Social Security benefits reversed a decade-long decline and increased sharply before reverting back to trend. This phenomenon raises two ques-tions: 1) who was induced to claim early?; and 2) how much monthly retirement income have they lost as a result? To address these questions, this brief, which reflects findings from a recent paper, uses individual-level data from the Health and Retirement Study (HRS).

Part time work can facilitate participation in the labor market and smooth the transition to retirement. Part-time employment, however, represents for the most part an involuntary choice. The aim of this paper is to conduct an empirical investigation of the determinants of part-time work. Using Spanish labor market data, we find that parttime work becomes a more desired employment alternative as people age, and that education and children’s age have opposite effects on women and men’s probabilities of voluntary part-time employment. Interestingly, most part-time work among women occurs in low-skill occupations, whereas part-time work among men are mainly concentrated in high-skill jobs

The release of the Federal Reserve’s 2010 Survey of Consumer Finances (SCF) is a great opportunity to assess how conflicting forces – the maturation of the system and the Pension Protection Act of 2006 on the one hand and the devastating effects of the 2008 financial collapse and Great Recession on the other hand – have affected workers’ 401(k) accounts. The SCF is a triennial survey of a nationally representative sample of U.S. households, which collects detailed information on their assets, liabilities, and demographic characteristics. The 2001, 2004, and 2007 surveys showed some improvement in terms of 401(k) participation, contribution levels, investment choices, and cashing out. But median holdings of those approaching retirement remained low even at the peak of the market in 2007. This brief explores the extent to which the positive trends in 401(k) behavior have persisted in the weak economy and how balances have fared in the wake of the financial collapse.

We set up a three-period overlapping generation model in which young individuals allocate their time to schooling and work, healthy middle aged individuals allocate their time to leisure and work and their income to consumption and savings for retirement, and old age individuals live off their savings. The three period setup allows us to distinguish between longevity and active life expectancy (i.e. the expected length of period 1 and 2). We show that individuals optimally respond to a longer active life by educating more and, if the labor supply elasticity is high enough, by supplying less labor. We calibrate the model to US data and show that the historical evolution of increasing education and declining labor supply can be explained as an optimal response to increasing active life expectancy. We integrate the theory into a unified growth model and reestablish increasing life expectancy as an engine of long-run economic development.

Banklovkommisjonens forslag til nytt tjenestepensjonsprodukt i privat sektor tilfredsstiller alle behov en arbeidsgiver måtte ha. Bedriften kan spare mye eller lite til de ansattes pensjoner. Arbeidsgiver kan videre fri seg fra en hver garanti, velte all risiko over på arbeidstakerne og dermed styre unna balanseføringen av framtidige forpliktelse. Motsatt kan arbeidsgiver garantere de ansatte lønnsregulering av pensjonskapitalen og dermed sikre et visst nivå på pensjonene. I notatet vises det bl.a. at forslagene til maksimalsatser er satt for lavt til å gi like gode pensjoner som dagens ytelsesordninger. Kommisjonens forslag på 7 pst må økes til minst 8,5 pst for å kunne sikre pensjoner på to tredeler av sluttlønn innenfor standardmodellen.

This first edition of the OECD Pensions Outlook takes a close look at the two main trends in pension design observed over the last two decades: first, the introduction of reforms to pay-as-you-go (PAYG), public pension systems such as later retirement and automatic adjustment mechanisms to pension benefits to improve the financial sustainability of these systems; second, the growth of funded private pension arrangements complementing PAYG public pensions. These developments are interlinked, as many pension reforms have ultimately led to a reduction in the replacement rate offered by PAYG public pension systems, increasing the need for later retirement and complementary forms of pension provision.

Since their introduction, the Riester pension scheme and the individual Riester products have become less beneficial to savers. Contracts concluded today will often lead to lower returns compared to contracts concluded in 2001. From a social perspective, meaning pension benefits in relation to individual saving contributions plus state subsidy, overall returns on all insurance-based products are very low.

The life insurance and pensions sector manages large funds with a truly long time horizon. These investors therefore naturally seek long-dated assets to match their liabilities. Real assets or real cash flows are preferred in order to hedge against inflation, which is particularly relevant for pension funds in order to assure a decent purchasing power for their clients’ retirement income.

States and localities account for pensions in their financial statements according to standards laid out by the Governmental Accounting Standards Board (GASB). Under these standards, state and local plans generally follow an actuarial model and discount their liabilities by the long-term yield on the assets held in the pension fund, roughly 8 percent. Most econo­mists contend that the discount rate should reflect the risk associated with the liabilities and, given that benefits are guaranteed under most state laws, the appropriate discount factor is closer to the riskless rate. The point is not that liabilities should be larger or smaller, but rather that the discount rate should reflect the nature of the liabilities; the characteristics of the assets backing the liabilities are irrelevant…

The National Retirement Risk Index (NRRI) measures the share of American households “at risk” of being unable to maintain their pre-retirement standard of living in retirement. The NRRI is determined by comparing households’ projected replacement rates – retirement income as a percentage of preretirement income – with target rates that would allow them to maintain their living standards.

Ole Christan Lien vil på dette seminaret presenterer de nyeste tallene for pensjonering og sysselsetting. Torunn Bragstad vil presentere en fersk artikkel hvor de ser på de to viktige årsaker til de trekkene vi observerer når det gjelder uførepensjonering, nemlig den demografiske utviklingen, og konsekvensene av store reformer innenfor det helserelaterte stønadssystemet. Avdelingsdirektør i Arbeidsdepartementet Roar Bergan vil gi en kommentar til begge innlegg.

The global financial and economic crisis has affected pension schemes in Europe in three major ways. Firstly, these schemes have served as one form of ‘automatic stabiliser’ – in other words, as a means of mitigating the potential social consequences of the negative state of the economy – and their use to this end is expected to increase social expenditure in many EU countries. Secondly, the worsening economic situation has entailed new challenges to the financial sustainability of social protection: growing unemployment and negative GDP growth represent a loss in revenues for welfare programmes and may thus lead to the deterioration of public budgets. Thirdly, the financial shock has dealt a severe blow to both private fully-funded schemes and public
reserve funds.