How the Financial Crisis Affects Pensions and Insurance and Why the Impacts Matter

Impavido, Gregorio; Tower, Ian

doi:10.2139/ssrn.1442253

Cited by 14 publications

(8 citation statements)

References 15 publications

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“…Given the matching of long run liabilities and long run assets in pension funds, contagious runs are less likely. However, there are other possible externalities from failure of pension funds, notably to the state (Impavido and Tower 2009), and similar investments by pension funds may give rise to economy wide (macroprudential) risks to financial markets as well as to funds themselves (Bank of England 2014). Hence the importance of counter cyclical regulations and guarantee funds for defined benefit schemes, which protect consumers but also the state.…”

Section: Why Regulate Pensions?mentioning

confidence: 99%

Pension provision, lifetime financial sustainability, care and dignity in old age: legal and economic issues

Davis¹,

Lastra²

2018

The Home

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The legal, policy and economic issues associated with pension provision, lifetime financial sustainability, and particularly care and dignity in old age and their implications for home life are fundamental challenges for the future of our society. Pension provision is in crisis and this paper highlights the crucial policy choices and regulatory challenges that this entails. The analysis also highlights the importance of the 'nuclear family' and the 'extended family' in the provision of care, from child care to old age care and the consideration that the home, supported by the wider society, is the natural environment in which such provision ought to take place. In this context, an adequate legal and regulatory framework for pensions needs to balance a number of competing interests, given the implications in terms of intergenerational debt within the national "family" of the financing of care and income in old age, the need for financial sustainability over a lifetime and the broader social justice considerations that are at stake in the design of schemes that provide adequate care and income in old age in a market economy.

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Section: Why Regulate Pensions?mentioning

confidence: 99%

Pension provision, lifetime financial sustainability, care and dignity in old age: legal and economic issues

Davis¹,

Lastra²

2018

The Home

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“…Central bank reserve managers joined the flight to quality and collectively pulled out more than US$500 billion of deposits and other investments from the banking sector from December 2007 to March 2009. Sources: Harvard Management Company (2009; Impavido and Tower (2009); Miracky and Bortolotti (2009); OECD (2010); Raddatz and Schmukler (2011); and Pihlman and van der Hoorn (2010).…”

Section: Central Banksmentioning

confidence: 99%

“…allocations stayed remarkably steady through 2001-10, with only about 3 percent moving from equities to bonds (+ 2 percent) and cash (+ 1 percent) in 2007-08, although this may reflect valuation effects and was partially reversed in 2009 (Figure 3). On the other hand, Impavido and Tower (2009) found that life insurance companies contributed to the downward spiral during the equity markets' fall in 2001-03 when they sold equities in an attempt to bolster their balance sheets that led to further declines in the market. 8 According to the latter study, sales of equities and other financial instruments by this class of institutional investors have been more widespread in the recent financial crisis.…”

Section: B Life Insurance Companiesmentioning

confidence: 99%

Procyclical Behavior of Institutional Investors During the Recent Financial Crisis: Causes, Impacts, and Challenges

Papaioannou

Pihlman²,

Hoorn³

et al. 2013

IMF Working Papers

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This paper (i) provides evidence on the procyclical investment behavior of major institutional investors during the global financial crisis; (ii) identifies the main factors that could account for such behavior; (iii) discusses the implications of procyclical behavior; and (iv) proposes a framework for sound investment practices for long-term investors. Such procyclical investment behavior is understandable and may be considered rational from an individual institution's perspective. However, our main conclusion is that behaving in a manner consistent with longterm investing would lead to better long-term, risk-adjusted returns and, importantly, could lessen the potential adverse effects of the procyclical investment behavior of institutional investors on global financial stability.

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“…Yet, those studies have analysed the relationship during periods of financial stability. There is hardly any empirical evidence on how household expenditure behaves during periods of financial crisis, although it has been widely acknowledged that such periods exert considerably adverse effects on pensions, as income sources, as well as the way they are spent (Grafova et al, 2020;Impavido & Tower, 2009). In this paper, we examined how expenditure behaves at retirement during turbulent times using household-level data, and examined the role of pension cuts during a severe financial crisis in explaining the drop in expenditures at retirement.…”

Section: Introductionmentioning

confidence: 99%

Retirement and Household Expenditure in Turbulent Times

et al. 2023

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We examine how expenditure changes at retirement during an institutionally and economically uncertain period when a series of pension reforms and cuts were implemented. Overall, we fail to confirm that consumption declines at retirement using data from Greece (2008–2018). Any estimated declines come from turbulent years when major pension cuts were applied. Expenditure drops at retirement were due to pension income shocks, especially for those who were particularly dependent on pension income. Further checks support the presence of an income shock mechanism for retirees who are relatively more treated during the crisis sub-period. Given an aging population and the ongoing global turbulence, our results offer valuable insights.

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How the Financial Crisis Affects Pensions and Insurance and Why the Impacts Matter

Cited by 14 publications

References 15 publications

Pension provision, lifetime financial sustainability, care and dignity in old age: legal and economic issues

Pension provision, lifetime financial sustainability, care and dignity in old age: legal and economic issues

Procyclical Behavior of Institutional Investors During the Recent Financial Crisis: Causes, Impacts, and Challenges

Retirement and Household Expenditure in Turbulent Times

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