One size fits all: How many default funds does a pension scheme need?

In this paper, we analyse the number of default investment funds appropriate for an occupational defined contribution pension scheme. Using a unique dataset of member risk attitudes and characteristics from a survey of a large UK pension scheme, we apply cluster analysis to identify two distinct groups of members in their 40s and 50s. Further analysis indicated that the risk attitudes of the two groups were not significantly different, allowing us to conclude that a single lifestyle default fund is appropriate

Assessment of the Willingness of Ebonyi State Government to Adopt the Contributory Pension Scheme in Nigeria

In the year 2004 Nigeria keyed into the contributory pension scheme. This was precipitated by the daunting challenges pensioners face in accessing their pensions under the non-contributory pension scheme which was introduced in 1979 by Act 102. The major challenges that confronted the non-contributory pension scheme were embezzlement of pension funds, and delay in the payment of retirement benefits to retirees and on time. These negatively affected the welfare of retirees. This study reviewed reasons why Ebonyi State government was stuck with the non-contributory pension scheme despite these challenges. The study was conducted in Ebonyi State and the study population was made up of 108 staffs of the Department of Pension’s, office of the Head of Service and staff of the Sub-Treasury, Ebonyi State Ministry of Finance. Questionnaire was administered to 108 respondents, out of which 85 were returned. Data generated reveal government’s unwillingness to submit for passage the contributory pension bill to the Ebonyi State House of Assembly (51.8%) and excessive bureaucracy in the adoption of the contributory pension scheme (60%), that contributory pension scheme is difficult to manage (56.5%) and so forth   as reasons why government has refused to introduce the contributory pension scheme. The study recommends the adoption of the contributory pension scheme as alternative to the challenges pensioners face in the management of the non-contributory pension scheme in Ebonyi State Nigeria

Unraveling Short- and Farsightedness in Politics

The absence of the deselection threat in incumbents’ last term in office can be negative or positive for society. Some politicians may reduce their efforts, while others may pursue beneficial long-term policies that may be unpopular in the short term. We propose a novel pension system that solves the effort problem while preserving willingness to implement long-term policies. The idea is to give politicians the option to choose between a flexible pension scheme and a fixed pension scheme. In a flexible pension scheme, the pension increases with short term performance as measured by the vote share of the officeholder’s party in the next election. This system increases social welfare by letting officeholders self-select into those activities that most benefit society. We analyze the properties and consequences of such a system and assess its robustness. Finally, we extend the pension system with choice to non-last-term situations and derive a general welfare result.elections, political contracts, vote-share thresholds, incumbents, selection, effort

Construction and Impact of a Buffer Fund within the French PAYG Pension Scheme in a Demo-Economic Model

This paper provides some results from a model built in order to study the linked impacts of demography and economy on theFrench pension scheme. The demo-economic model which is used is a neo-cambridgian model with two types of agents in aclosed economy. Since it includes a very thin description of the French pension scheme, one of its main advantage is its lightness while its main originality is to permit a macroeconomic linkage whether with a endogenous growth function or with a exogenous one.

The Italian Pension Gap: a Stochastic Optimal Control Approach

We study the gap between the state pension provided by the Italian pension system pre-Dini reform and post-Dini reform. The goal is to fill the gap between the old and the new pension by joining a defined contribution pension scheme and adopting an optimal investment strategy that is target-based. We find that it is possible to cover, at least partially, this gap with the additional income of the pension scheme, especially in the presence of late retirement and in the presence of stagnant career. Workers with dynamic career and workers who retire early are those who are most penalised by the reform. Results are intuitive and in line with previous studies on the subject

Ageing and retirement age. What can we learn from the Overlapping Generations Model ?

In this paper, the two-period OLG model has been modified to distinguish the effects of individual ageing from changes in the birth rate. Optimal pension and retirement age policies have been characterized in a dynamic framework. We have considered a mixed pension scheme that is fully funded, but offers agents an actuarially fair choice on their retirement age. We show that this mixed pension scheme makes it possible to implement the optimal solution. The numerical simulations describe the dilemmas France currently faces.Pensions, retirement age, Overlapping Generation Model.

The Pension Scheme in Vietnam: Current Status and Challenges in an Aging Society

The publicly-managed Pay-As-You-Go (PAYG) defined-benefit pension scheme in Vietnam is described, with an analysis of its financial sustainability in the context of an aging society in a dynamically efficient economy. By using actuarial models developed by the International Labor Organization (ILO), the paper finds that the implicit pension debt (IPD) of the scheme is high in comparison with GDP of the year 2000, which is the base year for projections. Regarding the social aspect, a high IPD implies that the burden of maintaining this scheme is borne by the current and future participants. For this reason, the pension scheme in Vietnam will cause not only financial instability but also inter-generational inequity. In order to avoid this situation, the current scheme needs to be reformed. In particular, Vietnam should move to a partially-funded defined-contribution scheme with careful considerations of social and economic impacts so as to avoid both financial instability and inter-generational inequity.aging population; pension scheme; pension debt; financial sustainability; Vietnam

Old-age security in Bhutan: From lump-sum payments towards a pension scheme

At present, Bhutan's old-age security still is mostly based on an extended family network. Formal old-age provision mainly is for civil servants, providing, however, only lump-sum payments. This paper analyses the present conditions and obvious deficits of the existing arrangements and outlines possibilities for introducing a pension scheme which provides regular (monetary) income in old age. Income in old age could be increased and costs could be reduced by transforming the existing Provident Fund totally or partially into a pension scheme. This can be combined with pay-as-you-go and funded elements. --