Announcements

THE SOCIAL INSURANCE RESEARCH NETWORK (SIRN), sponsored by the National Academy of Social Insurance (NASI) The Social Insurance Research Network (SIRN), directed by Larry Atkins, President, National Academy of Social Insurance, is an online venue providing access to scholarly research and professional announcements in the Social Insurance community. Social Insurance includes the systems for insuring workers and their families against economic insecurity caused by the loss of income from work and the cost of health care, such as Social Security, Medicare, Workers' Compensation, unemployment insurance, related social assistance and private employee benefits. NASI is a nonprofit, nonpartisan organization made up of the nation's leading experts on social insurance. Its mission is to promote understanding and informed policymaking on social insurance and related programs through research, public education, training, and the open exchange of ideas. SIRN is dedicated to increasing communication among social insurance scholars, practitioners, and policy makers throughout the world.


Table of Contents

Pareto-Improving Immigration and Its Effect on Capital Accumulation in the Presence of Social Security

Hisahiro Naito, University of Tsukuba

Individual Capability and Effort in Retirement Benefit Choice

Hazel Bateman, University of New South Wales (UNSW) - School of Actuarial Studies, Centre for Pensions and Superannuation
Christine Eckert, University of Technology Sydney (UTS) - School of Marketing
Fedor Iskhakov, University of New South Wales (UNSW) - ARC Centre of Excellence in Population Ageing Research (CEPAR)
Jordan J. Louviere, University of South Australia - Institute for Choice
Stephen E. Satchell, University of Cambridge - Faculty of Economics and Politics
Susan Thorp, University of Technology Sydney (UTS) - School of Finance and Economics, Financial Research Network (FIRN)

The Impact of Living and Working Longer on Pension Income in Five European Countries: Estonia, Finland, Hungary, the Netherlands and Poland

Niku Määttänen, ETLA, Research Institute of the Finnish Economy
Andres Vork, PRAXIS Center for Policy Studies
Magnus Piirits, PRAXIS Center for Policy Studies
Robert I. Gal, Hungarian Central Statistical Office (HCSO) - Hungarian Demographic Research Institute (HDRI)
Elena Jarocinska, CASE - Center for Social and Economic Research
Anna Ruzik, CASE - Center for Social and Economic Research
Theo Nijman, Tilburg University - Center and Faculty of Economics and Business Administration

Estimation of a Structural Labour Supply Model for Belgium: Application to the Earnings Test for Pension Recipients

Marjan Maes, KU Leuven

Beyond Financialization: Older Entrepreneurship and Retirement Planning

Thomas Wainwright, University of Southampton - School of Management
Ewald Kibler, Aalto University - School of Business

Lessons from the Efforts to Manage the Shift Away from Defined Benefit Plans to Defined Contribution Plans in Australia, the United Kingdom, and the United States

Elizabeth F. Brown, Georgia State University - Department of Risk Management and Insurance


SOCIAL SECURITY, PENSIONS & RETIREMENT INCOME eJOURNAL

"Pareto-Improving Immigration and Its Effect on Capital Accumulation in the Presence of Social Security" Free Download
Tokyo Center for Economic Research (TCER) Paper No. E-81

HISAHIRO NAITO, University of Tsukuba
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The effect of accepting more immigrants on welfare in the presence of a pay-as-you-go social security system is analyzed qualitatively and quantitatively. First, it is shown that if initially there exist intergenerational government transfers from the young to the old, the government can lead an economy to the (modified) golden rule level within a finite time in a Pareto-improving way by increasing the percentage of immigrants to natives (PITN). Second, using the computational overlapping generation model, the welfare gain is calculated of increasing the PITN from 15.5 percent to 25.5 percent and years needed to reach the (modified) golden rule level in a Pareto-improving way in a model economy. The simulation shows that the present value of the welfare gain of increasing the PITN comprises 23 percent of the initial GDP. It takes 112 years for the model economy to reach the golden rule level in a Pareto-improving way.

"Individual Capability and Effort in Retirement Benefit Choice" Free Download
UNSW Australia Business School Research Paper No. 2014ACTL07

HAZEL BATEMAN, University of New South Wales (UNSW) - School of Actuarial Studies, Centre for Pensions and Superannuation
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CHRISTINE ECKERT, University of Technology Sydney (UTS) - School of Marketing
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FEDOR ISKHAKOV, University of New South Wales (UNSW) - ARC Centre of Excellence in Population Ageing Research (CEPAR)
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JORDAN J. LOUVIERE, University of South Australia - Institute for Choice
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STEPHEN E. SATCHELL, University of Cambridge - Faculty of Economics and Politics
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SUSAN THORP, University of Technology Sydney (UTS) - School of Finance and Economics, Financial Research Network (FIRN)
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We investigate the role of capability and effort in the management of retirement ruin. In an experimental setting, we analyze how 854 DC plan members reallocated wealth between a lifetime annuity and a phased withdrawal account when we increased the risk of exhausting the phased withdrawal account before the end of life. We find that more numerate individuals who put effort into understanding product features chose more longevity insurance at higher ruin risks. Financially literate members were more likely to show understanding of the product features, but general financial literacy did not directly improve ruin risk management. Initiatives aiming to help DC members understand income stream products at the time of the decision are warranted.

"The Impact of Living and Working Longer on Pension Income in Five European Countries: Estonia, Finland, Hungary, the Netherlands and Poland" Free Download
Netspar Discussion Paper No. 08/2014-036

NIKU MÄÄTTÄNEN, ETLA, Research Institute of the Finnish Economy
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ANDRES VORK, PRAXIS Center for Policy Studies
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MAGNUS PIIRITS, PRAXIS Center for Policy Studies
ROBERT I. GAL, Hungarian Central Statistical Office (HCSO) - Hungarian Demographic Research Institute (HDRI)
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ELENA JAROCINSKA, CASE - Center for Social and Economic Research
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ANNA RUZIK, CASE - Center for Social and Economic Research
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THEO NIJMAN, Tilburg University - Center and Faculty of Economics and Business Administration
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Life expectancies are rapidly increasing and uncertain in all countries in Europe. To keep pension systems affordable, policy reforms are to be implemented which will encourage individuals to work longer and that adjust pension systems such that if life expectancy increases without adjustments in the retirement age, the pension income level decreases. In this paper we analyze the impact of working and living longer on pension incomes in five European countries and assess the impact of these policy reforms on the financial well-being of the elderly in these countries. The paper shows the diversity of the policy measures taken in the various countries. Furthermore, we analyze the financial incentives to work longer and to postpone claiming pension benefit in the five countries and we address the question, how attractive these options are. Moreover we analyze how increases in life expectancy and survival probabilities affect pension incomes.

"Estimation of a Structural Labour Supply Model for Belgium: Application to the Earnings Test for Pension Recipients" Free Download
Netspar Discussion Paper No. 09/2014-037

MARJAN MAES, KU Leuven
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In several OECD countries pension benefits are taxed away if retirees continue working and receive earnings that cross a threshold. Recently governments started to increase these earnings thresholds for working pensioners. On the basis of Belgian administrative data covering the years before and after such a reform, we show that bunching at a convex kink of the budget constraint tracks these tax rule changes. To account also for income effects along other parts of the piecewise-linear budget constraint, we estimate a structural labour supply model. A removal of the earnings test would lead to an increase of 2.44 hours worked per week but causes a budgetary deficit as well: pension benefits will be claimed earlier (as the deferral rate for pensions equals zero in Belgium) while social contribution revenues fall back. The intuition is that the income effect which leads high-earners to work less partly offsets the substitution effect which stimulates low-earner (previously at the convex kink) to work more.

"Beyond Financialization: Older Entrepreneurship and Retirement Planning" Free Download
Wainwright, T. and Kibler, E. (2014). Beyond financialization: Older entrepreneurship and retirement planning. Journal of Economic Geography. 14(4): 849-864.

THOMAS WAINWRIGHT, University of Southampton - School of Management
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EWALD KIBLER, Aalto University - School of Business
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Recent research in economic geography and management studies has scrutinised financialization and its permeation into ‘everyday’ life. In particular, studies have highlighted how government policy is transferring the responsibility of pension planning to individuals, where retirement income is funded from financial market returns. However, research has also suggested that a financialized model of retirement is not fully viable. Our study seeks to contribute to research on the geographies of retirement planning by examining an emerging model of retirement: older entrepreneurship. In doing so, we examine how households and individuals are attempting to manage the inadequacies of finance-centric retirement plans through the development of enterprises in ‘retirement’. Specifically, we explore how people are running businesses from home at an ‘older’ age, displacing the notion of ‘retirement’ with a work-retirement balance.

"Lessons from the Efforts to Manage the Shift Away from Defined Benefit Plans to Defined Contribution Plans in Australia, the United Kingdom, and the United States" Free Download

ELIZABETH F. BROWN, Georgia State University - Department of Risk Management and Insurance
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This Article examines what lessons may be learned from examining how Australia, the United Kingdom, and the United States have tried to manage the shift away from defined benefit plans towards defined contribution plans. This shift has fundamentally changed the relationship between workers and the financial industry. While defined contribution plans provide employees with some advantages over defined benefit plans (e.g., portability, early vesting, greater autonomy), they also force employees to manage certain risks (longevity risk, investment risk) that they are ill prepared to manage. In addition, the differences in the way funds in defined contribution plans and defined benefit plans are managed affects the distribution of funds within financial markets that is potentially damaging to the economy. For example, these differences can lead to decreases in efficient allocation of investments and the creation of asset bubbles. These factors played a role in the recent financial crisis and, if left unaddressed, may contribute to future financial crises.

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About this eJournal

This eJournal distributes working and accepted paper abstracts on all topics related to old age pensions and retirement. This includes papers on social security, employment based pensions and other publicly provided or tax-favored mechanisms for retirement income. The journal welcomes submissions from any discipline and a broad range of topic areas, including benefit adequacy, pension finance, the design and reform of social security and pension systems, retirement policy, and comparative analyses of U.S. pension and retirement issues with those of other countries.

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Directors

SIRN SUBJECT MATTER EJOURNALS

LARRY ATKINS
National Academy of Social Insurance (NASI)
Email: latkins@nasi.org

Please contact us at the above addresses with your comments, questions or suggestions for SIRN-Sub.

Advisory Board

Social Security, Pensions & Retirement Income eJournal

HENRY J. AARON
Bruce and Virginia MacLaury Senior Fellow, Brookings Institution - Economic Studies Program

KENNETH S. APFEL
Director, Management, Finance and Leadership Program - University of Maryland

MERTON C. BERNSTEIN
Walter Coles Professor of Law Emeritus, Washington University in Saint Louis - School of Law

BING YUNG-PING CHEN
Frank J. Manning Eminent Scholar's Chair in Gerontology, University of Massachusetts at Boston - Gerontology Institute

ERIC R. KINGSON
Professor of Social Work and Public Administration, Syracuse University - School of Social Work

OLIVIA S. MITCHELL
Professor of Business Economics and Public Policy, Professor of Insurance and Risk Management, Executive Director, Pension Research Council, University of Pennsylvania - The Wharton School, National Bureau of Economic Research (NBER)

ALICIA MUNNELL
Peter F. Drucker Professor in Management Sciences, Boston College - Center for Retirement Research

JOHN L. PALMER
University Professor, Syracuse University - Maxwell School of Citizenship and Public Affairs

STANFORD G. ROSS
Attorney and Consultant, Arnold & Porter, Chair, Social Security Advisory Board

C. EUGENE STEUERLE
Senior Fellow, Urban Institute

LAWRENCE H. THOMPSON
Senior Fellow, Urban Institute

JACK VANDERHEI
Research Director, Employee Benefit Research Institute (EBRI)

JOHN B. WILLIAMSON
Professor of Sociology, Boston College - Department of Sociology