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

Does Retirement Make You Happy? A Simultaneous Equations Approach

Raquel Fonseca, University of Quebec at Montreal (UQAM) - Faculty of Management (ESG), Rand Corporation, Centre interuniversitaire sur le risque, les politiques économiques et l'emploi (CIRPÉE)
Arie Kapteyn, Dornsife Center for Economic and Social Research - University of Southern California, Institute for the Study of Labor (IZA)
Jinkook Lee, University of Southern California - Davis School of Gerontology
Gema Zamarro, University of Arkansas

Designing Guarantee Options in Defined Contribution Pension Plans

Andrea Consiglio, University of Palermo
Michele Tumminello, Carnegie Mellon University - Department of Social and Decision Sciences, University of Palermo
Stavros A. Zenios, University of Cyprus, University of Pennsylvania - Wharton Financial Institutions Center

Social Security Trust Fund Cash Flows and Reserves

David Pattison, Government of the United States of America - Social Security Administration

Solidarity Against All Odds: Organized Labor and Pension Privatization in Western Europe

Marek Naczyk, Sciences Po Paris - Centre d’études européennes, Sciences Po Paris - LIEPP
Martin Seeleib-Kaiser, University of Oxford - Department of Social Policy and Social Work

Will They Take the Money and Work? An Empirical Analysis of People's Willingness to Delay Claiming Social Security Benefits for a Lump Sum

Raimond Maurer, Goethe University Frankfurt
Olivia S. Mitchell, University of Pennsylvania - The Wharton School, National Bureau of Economic Research (NBER)
Ralph Rogalla, Goethe University Frankfurt - Department of Finance
Tatjana Schimetschek, Goethe University Frankfurt - Department of Finance


SOCIAL SECURITY, PENSIONS & RETIREMENT INCOME eJOURNAL

"Does Retirement Make You Happy? A Simultaneous Equations Approach" Free Download
Michigan Retirement Research Center Research Paper No. 2014-310

RAQUEL FONSECA, University of Quebec at Montreal (UQAM) - Faculty of Management (ESG), Rand Corporation, Centre interuniversitaire sur le risque, les politiques économiques et l'emploi (CIRPÉE)
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ARIE KAPTEYN, Dornsife Center for Economic and Social Research - University of Southern California, Institute for the Study of Labor (IZA)
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JINKOOK LEE, University of Southern California - Davis School of Gerontology
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GEMA ZAMARRO, University of Arkansas
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Continued improvements in life expectancy and fiscal insolvency of public pensions have led to an increase in pension entitlement ages in several countries, but its consequences for subjective well-being are largely unknown.

Financial consequences of retirement complicate the estimation of effects of retirement on subjective well-being as financial circumstances may influence subjective well-being, and therefore, the effects of retirement are likely to be confounded by the change in income. At the same time, unobservable determinants of income are probably related with unobservable determinants of subjective well-being, making income possibly endogenous if used as control in subjective well-being regressions. To address these issues, we estimate a simultaneous model of retirement, income, and subjective well-being while accounting for time effects and unobserved individual effects. Public pension arrangements (replacement rates, eligibility rules for early and full retirement) serve as instrumental variables. We use data from HRS and SHARE for the period 2004-2010.

We find that depressive symptoms are negatively related to retirement while life satisfaction is positively related. Remarkably, income does not seem to have a significant effect on depression or life satisfaction. This is in contrast with the correlations in the raw data that show significant relations between income and depression and life satisfaction. This suggests that accounting for the endogeneity of income in equations explaining depression or life satisfaction is important.

"Designing Guarantee Options in Defined Contribution Pension Plans" Free Download
The Wharton Financial Institutions Center, Working Paper 15-03

ANDREA CONSIGLIO, University of Palermo
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MICHELE TUMMINELLO, Carnegie Mellon University - Department of Social and Decision Sciences, University of Palermo
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STAVROS A. ZENIOS, University of Cyprus, University of Pennsylvania - Wharton Financial Institutions Center
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The shift from defined benefit (DB) to defined contribution (DC) is pervasive among pension funds, due to demographic changes and macroeconomic pressures. In DB all risks are borne by the provider, while in plain vanilla DC all risks are borne by the beneficiary. For DC to provide income security some kind of guarantee is required. A minimum guarantee clause can be modeled as a put option written on some underlying reference portfolio of assets and we develop a discrete model that optimally selects the reference portfolio to minimise the cost of a guarantee. While the relation DB-DC is typically viewed as a binary one, the model can be used to price a wide range of guarantees creating a continuum between DB and DC. Integrating guarantee pricing with asset allocation decision is useful to both pension fund managers and regulators. The former are given a yardstick to assess if a given asset portfolio is fit-for-purpose; the latter can assess differences of specific reference funds with respect to the optimal one, signalling possible cases of moral hazard. We develop the model and report numerical results to illustrate its uses.

"Social Security Trust Fund Cash Flows and Reserves" Free Download
Social Security Bulletin, 75(1): 1-34, 2015

DAVID PATTISON, Government of the United States of America - Social Security Administration
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This article examines the Social Security trust fund reserves and cash flows and their interrelationships with the Treasury's cash management operations and the budget of the rest of the federal government. The article considers the extent to which the trust fund reserves and interest income reflect cash transactions between the trust funds and the public and are not, as some commenters have asserted, just accounting fictions. It also considers whether, under the Social Security system's self-financing framework, an improvement in trust fund finances can help relieve the accumulated debt commitments of the rest of the federal government.

"Solidarity Against All Odds: Organized Labor and Pension Privatization in Western Europe" Free Download

MAREK NACZYK, Sciences Po Paris - Centre d’études européennes, Sciences Po Paris - LIEPP
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MARTIN SEELEIB-KAISER, University of Oxford - Department of Social Policy and Social Work
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In an era of fiscal austerity and welfare state retrenchment, has organized labor become increasingly split along skill and industry lines? While recent political science accounts have emphasized how the privileged segments of the labor movement have helped promote a dualization of welfare, this paper argues that, in the area of pensions, unions representing high-skilled workers and the core industrial sectors of the economy have paradoxically increased their cooperation with unions representing the less privileged segments of labor, and this in order to improve coverage of private pensions across the board. These unions’ motivations for doing so and the strategies they have employed have nonetheless differed according to the pre-existing institutional design of domestic pension systems. The argument is supported with case studies of British, French, German and Belgian unions’ involvement in contemporary pension reform.

"Will They Take the Money and Work? An Empirical Analysis of People's Willingness to Delay Claiming Social Security Benefits for a Lump Sum" Free Download
SAFE Working Paper No. 84

RAIMOND MAURER, Goethe University Frankfurt
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OLIVIA S. MITCHELL, University of Pennsylvania - The Wharton School, National Bureau of Economic Research (NBER)
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RALPH ROGALLA, Goethe University Frankfurt - Department of Finance
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TATJANA SCHIMETSCHEK, Goethe University Frankfurt - Department of Finance
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This paper investigates whether exchanging the Social Security delayed retirement credit, currently paid as an increase in lifetime annuity benefits, for a lump sum would induce later claiming and additional work. We show that people would voluntarily claim about half a year later if the lump sum were paid for claiming any time after the Early Retirement Age, and about two-thirds of a year later if the lump sum were paid only for those claiming after their Full Retirement Age. Overall, people will work one-third to one-half of the additional months, compared to the status quo. Those who would currently claim at the youngest ages are likely to be most responsive to the offer of a lump sum benefit.

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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 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