Time for Retirement ‘SeLFIES’?

Investments and Pensions Europe, Forthcoming

2 Pages Posted: 5 Apr 2017 Last revised: 13 Apr 2017

See all articles by Robert C. Merton

Robert C. Merton

Massachusetts Institute of Technology (MIT) - Sloan School of Management; National Bureau of Economic Research (NBER); Harvard Business School - Finance Unit

Arun Muralidhar

AlphaEngine Global Investment Solutions; George Washington University

Date Written: April 3, 2017

Abstract

To address the looming retirement crisis, many governments are introducing new pension programmes tied to employment for uncovered workers (NEST in the UK and Secure Choice in some US states). These attempt to improve access to pensions, and continue a trend of transferring responsibility for retirement security from governments and employers (via defined benefit [DB] plans) to the individual (via defined contribution [DC] plans), as neither governments nor companies are willing to bear the liabilities associated with pension obligations. This shift requires new thinking about how portfolios are managed and which instruments are available to investors. Our proposed SeLFIES (Standard of Living indexed, Forward-starting, Income-only Securities) make individuals self-reliant and are also advantageous for governments.

Keywords: Retirement SeLFIES, Pension REform, Financial Innovation, Forward Starting Bonds, DB Pensions, DC Pensions, Standard of Living Indexation

Suggested Citation

Merton, Robert C. and Muralidhar, Arun, Time for Retirement ‘SeLFIES’? (April 3, 2017). Investments and Pensions Europe, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2945668

Robert C. Merton

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

77 Massachusetts Avenue
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Cambridge, MA 02139-4307
United States
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National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
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Harvard Business School - Finance Unit ( email )

Boston, MA 02163
United States
617-495-6678 (Phone)

Arun Muralidhar (Contact Author)

AlphaEngine Global Investment Solutions ( email )

Great Falls, VA
United States

HOME PAGE: http://www.mcubeit.com

George Washington University ( email )

2121 I Street NW
Washington, DC 20052
United States

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