DAVID HAUNER, International Monetary Fund (IMF) - African Department
Email: dhauner@imf.org

Putting the pension system on a sustainable footing arguably remains the biggest challenge in Russia's economic policies. The debate about the policy options was hitherto constrained by the absence of general equilibrium analysis. This paper fills this gap by simulating their macroeconomic effects in a DSGE model calibrated to Russia's economy - the first of its kind to the best of our knowledge. The results suggest that a minimum benefit level in the public system should optimally be financed through lower government consumption, while higher taxation of labor and capital should be avoided. Reducing public investment spending is superior to increasing consumption taxes unless investment generates high rates of return.

EDWARD PALMER, Uppsala University
Email: edward.palmer@rfv.sfa.se

Far-reaching changes in the regulation of financial markets and the organization of public pensions in the 1980s and 1990s transformed the landscape for retirement products in Sweden. First, banking and insurance were extensively deregulated in the 1980s, while the securities markets experienced major expansion. Insurance received a large boost from the authorization of unit-linked products in the early 1990s. Second, the public pension system was reformed. Survivor benefits for widows were eliminated from the public pillar in the late 1980s, leading to a large increase in demand for term life insurance. The old defined benefit public pension system was replaced by a notional or nonfinancial defined contribution (NDC) scheme, while a funded defined contribution (FDC) component was also created in the public pillar. The four occupational pension funds that cover the majority of Swedish workers were also converted into FDC schemes. This paper reviews the implications of these changes for the Swedish annuity market. It discusses the regulation of payout options in Sweden, highlighting the compulsory use of life annuities in the public pillar and the preference for term annuities in the occupational funds. It examines the performance of providers of retirement products, including the PPM, and reviews the increasing focus on risk-based regulation and supervision. The paper also emphasizes Sweden's success in moving in the direction of increased funding and privatization of old age insurance, while maintaining its basic character as a highly developed welfare state.

DAVID F. BABBEL, University of Pennsylvania - The Wharton School - Finance and Insurance Departments, CRA International
Email: babbel@wharton.upenn.edu
RAVI REDDY, affiliation not provided to SSRN
Email: hdreddy@ibtco.com

In this study, we show how to measure the size of tax benefit arising from the purchase of fixed annuities - both deferred and immediate. We demonstrate how the size of tax benefit available from tax deferral depends on five factors: (1) the length of time the annuity is held during the accumulation and decumulation phases of ownership; (2) whether a deferred annuity is annuitized (either by conversion or by a 1035 exchange) at the end of the surrender period, or taken as a lump sum distribution; (3) the level of yields; (4) tax rates on ordinary income; and (5) the differential between tax rates on ordinary income and tax-preferred treatment of dividends and capital gains. We provide a set of formulae that can be used to estimate the size of tax benefit arising from tax deferral under varied scenarios.

JOHN HODDINOTT, International Food Policy Research Institute
Email: John.Hoddinott@dal.ca
AGNES R. QUISUMBING, Consultative Group on International Agricultural Research (CGIAR) - International Food Policy Research Institute
Email: a.quisumbing@cgiar.org

This paper summarizes the currently available quantitative tools that measure vulnerability. It reviews data options currently available to researchers and how these can be supplemented with other sources in order to conduct risk and vulnerability assessments. While one could use price, exchange rate, and balance of payments data to examine macroeconomic shocks, and rainfall data to assess the severity of droughts and floods, we are ultimately interested in their impacts on households - thus the emphasis on household data. It begins with a conceptual framework that links risk, risk management, and vulnerability. Building on this discussion, it describes techniques for measuring vulnerability within a population before discussing the data issues associated with their implementation. Building on this, it considers four questions: (1) Who is vulnerable? (2) What are the sources of vulnerability? (3) How do households cope with risk and vulnerability? and (4) What is the gap between risks and risk management mechanisms?

MARK N. MERCER, affiliation not provided to SSRN
Email: mnmercer@ramercercpa.com

Mark Mercer describes the factors that must be considered when choosing between a traditional IRA and a Roth IRA. Many published articles and analyses of the Traditional vs. Roth decision framework produce results that are not consistent and often times lead to conclusions that are incorrect. Indeed, many articles claiming to clarify common myths and misconceptions in the decision making process also contain results that are not supported by any underlying theory and often lead to results that vary from analysis to analysis.

This article describes a method of "proofing" the results reached in financial projections by observing after-tax returns on theoretical post-tax deferred wage asset allocations. Absent this "proof", often times the comparison of the Traditional vs. the Roth is simply playing with numbers.