Default Funds in U.K. Defined-Contribution Plans                     (corrected)

Byrne, Alistair; Blake, David; Cairns, Andrew J. G.; Dowd, Kevin

doi:10.2469/faj.v63.n4.4748

Cited by 31 publications

(29 citation statements)

References 14 publications

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“…It also means encouraging employers or other plan providers to offer default portfolios that provide reasonable expected returns at what might be considered by most to be acceptable risk (Beshears et al 2009). Some researchers also recommend limiting the number of portfolio choices to avoid information overload (Agnew and Szykman 2005;Byrne et al 2007;Cronqvist and Thaler 2004;Iyengar et al 2003).…”

Section: Default Plans For Passive Investorsmentioning

confidence: 98%

“…Latin American countries, including Chile, offer a limited number of portfolios and require the default investments to have a life-cycle strategy (Tapia and Yermo 2007). As of April 2005, the United Kingdom requires default funds to use some form of life-cycle fund (Byrne et al 2007). Sweden's default plan for its Premium Pension System introduced in 2000 had one portfolio regardless of age, but as of May 2010 a life-cycle default plan is required (Dahlquist et al 2012).…”

Section: Default Plans For Passive Investorsmentioning

confidence: 99%

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Choice of Retirement Funds in Chile: Are Chilean Women More Risk Averse than Men?

Kristjanpoller

Olson

2015

Sex Roles

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This study examined the investment decisions of women and men in Chile who were contributing to Chile's mandatory defined contribution (DC) retirement plan, using a large survey of participants (2782 people) conducted in 2009 by Chile's Subsecretariat of Social Protection. The basic research question was whether Chilean women were more risk averse in their retirement investment decisions than Chilean men. Chile's retirement plan offers a default plan for those who do not want to manage their funds. For those wishing to manage their investments, it offers five funds varying in risk from an all bond fund to a fund that is primarily stocks. There was no significant difference in the percentage of men and women choosing the default funds. We used probit analysis to determine what demographic factors affected the choice of the default fund, and found that younger people and men with less education and less income were more likely to choose the default; only age was significant for women. We found no significant gender differences in the fund choices of active investors. We conducted linear regression analysis by gender, where the dependent variable was the fund, with fund 1 having the lowest risk and fund 5 having the highest risk. We found that that the risk taking decreased with age and increased with financial knowledge, psychological risk tolerance, income and unemployment. Chilean women and men seemed similar in their investment decisions.

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Section: Default Plans For Passive Investorsmentioning

confidence: 98%

Section: Default Plans For Passive Investorsmentioning

confidence: 99%

Choice of Retirement Funds in Chile: Are Chilean Women More Risk Averse than Men?

Kristjanpoller

Olson

2015

Sex Roles

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“…Tables 8 and 9 depict the estimated measures obtained according to both approaches, for MF and IC investment distributions, respectively. 10 Though the goal of our study is not to advocate the life-cycle model in general, but rather to compare two potential approaches to the model, we have repeated our empirical analysis, using both investment distributions and both techniques of asset return estimation, for a pension fund that keeps all asset allocations constant throughout the employee's working career. The results (available upon request from the authors) demonstrate that employing this "non-life-cycle" model of investment distribution leads to significantly higher standard deviations of returns compared to those reported in tables 8 to 11 for the two approaches to the life-cycle model (for example, with MF investment distribution we obtain an estimated standard deviation of 9.29% and a simulated standard deviation of 1,312,581 NIS), the differences in the expected returns being much less dramatic.…”

Section: Accumulating Versus Switching Approach: Returns and Savings mentioning

confidence: 99%

“…Life-cycle investment strategies are also said to reduce the volatility of wealth outcomes making them desirable to investors who seek a reliable estimate of final pension a few years before retirement (e.g., Blake et al, 2001). On the other hand, some researchers note that these benefits come at a substantial cost to the investor -giving up the significant upside potential of wealth accumulation offered by more aggressive strategies (Booth and Yakoubov, 2000;Byrne et al, 2007).…”

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confidence: 99%

Accumulating approach to the life-cycle pension model: practical advantages

Azoulay¹,

Kudryavtsev²,

Shahrabani³

2016

fintp

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“…This is an average asset allocation pattern similar to that of Ellement and Lucas, 9 as well as Pang. 10 5 Byrne et al (2007). 6 Glickman and Kuehneman (2006).…”

Section: S56mentioning

confidence: 99%

A New Korean Defined Contribution Plan Framework to Enhance Retirement Income Security: Combining Lifecycle Funds with Compulsory Annuitisation

Kyonghee

Sung

2010

Geneva Pap Risk Insur Issues Pract

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In this paper, the intension is to construct a new Korean defined contribution operation structure that better meets retirement income security by integrating accumulation and payout phases. For this, two approaches are compared: a lump sum withdrawal programme supported by a principal preservation fund (i.e. current approach), and the combination of compulsory annuitisation with lifecycle funds (i.e. alternative approach). We set benchmark incomes, annuity incomes from the immediate life annuity policy, purchasable at retirement with the accumulated assets of lifecycle funds. The above two approaches are then assessed in terms of the probability of shortfall employed here to measure the longevity risk, at a Value-at-Risk of 50, 75 and 95 per cent, respectively. Consequently, it is shown that the alternative approach provides better retirement income security than the current approach.

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Default Funds in U.K. Defined-Contribution Plans (corrected)

Cited by 31 publications

References 14 publications

Choice of Retirement Funds in Chile: Are Chilean Women More Risk Averse than Men?

Choice of Retirement Funds in Chile: Are Chilean Women More Risk Averse than Men?

Accumulating approach to the life-cycle pension model: practical advantages

A New Korean Defined Contribution Plan Framework to Enhance Retirement Income Security: Combining Lifecycle Funds with Compulsory Annuitisation

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