Labor Market Uncertainty and Pension System Performance

Mitchell, Olivia S.; Turner, John A.

doi:10.2139/ssrn.1477119

Cited by 9 publications

(6 citation statements)

References 68 publications

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“…The pension fund industry is a critical vehicle for retirement planning among other savings alternatives (Altfest, 2004). Through the asset pool created over an individual's working life, the pension fund industry plays a critical role in smoothing out the quality of life in the retirement phase (Mitchell & Turner, 2010;Yohane et al, 2022). This is dependent on the extent to which pension funds can create value on member contributions through investment activities (Hlaváč, 2011).…”

Section: Statement Of the Problemmentioning

confidence: 99%

“…Regulating pension fund asset allocation affects financial performance (Mwandemena, 2006;Lungu, 2009) The introduction of a guaranteed minimum return on member contributions dampens the volatility of retirement outcomes (Sin, 2002;Mitchell & Turner, 2010). On the contrary, argue that such regulations and policies only make it difficult for managers to design optimal portfolios.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Pension funds play a critical role in income replacement and consumption smoothing in the decumulation phase of retirees (Mitchell & Turner, 2009). The industry also facilitates the movement of financial resources in the economy by channeling funds to firms and entrepreneurs with positive returns on investment projects and business opportunities.…”

Section: Introductionmentioning

confidence: 99%

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Value Creation on Member Contributions in Zambian Pension Funds: Evidence for Imperative Investment in Financial Education

Handema,

Lungu,

Chabala

et al. 2024

OJBM

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This paper evaluated the extent to which pension funds in Zambia are growing member contributions to inform the behavior of fund managers, policymakers, and prospective retirees. Stacked data on annual pension fund financial performance for the period between 2011 and 2020 was collected from the Pensions and Insurance Authority. Data on the performance of riskless government securities and annual inflation was obtained from the Bank of Zambia. Descriptive and inferential statistical techniques were used to analyze the data set. The study established that the industry was able to grow member contributions by a nominal average of 12% and 3% in real terms. The study also established that the Sharpe ratio was insignificantly negative in the short term and significantly negative in the long term. This implies that the pension fund industry failed to significantly grow member contributions for meaningful benefits. These findings also mean that DC pension funds will only provide minimal benefits while DB pension funds might have challenges in meeting their obligations. The study recommends that prospective retirees engage in other wealth-generating activities to supplement the retirement package from the pension fund industry. It is also recommended that the government collaborates with training institutions to equip prospective retirees with the financial literacy skills needed for successful investment and entrepreneurial undertakings. The study further recommends that policymakers and fund managers need to reflect on policy guidelines and investment strategies in the industry if pension funds are to provide meaningful benefits for income replacement and consumption smoothing in the deccumulation phase.

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Section: Statement Of the Problemmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Value Creation on Member Contributions in Zambian Pension Funds: Evidence for Imperative Investment in Financial Education

Handema,

Lungu,

Chabala

et al. 2024

OJBM

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“…6. Other scholars working with actual earnings trajectories include Mitchell, Moore, and Phillips (2000), Mitchell, Phillips, and Au (2007), and Nichols and Favreault (2008).…”

Section: Conclusion and Policy Implicationsmentioning

confidence: 99%

Evaluating the Financial Performance of Pension Funds

2010

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Contents ix 7.2 Capital Markets Assumptions 7.3 Summary Table of Simulation Results 7.4 Simulation Results for Investment Strategies When Labor Income Is Nonstochastic 7.5 Simulation Results for Investment Strategies When Labor Income Is Stochastic and Uncorrelated with Stock Returns 7.6 Simulation Results for Investment Strategies When Labor Income Is Stochastic and Correlated with Stock Returns x Contents xi This volume is the product of a partnership organized by the World Bank that includes the Organisation for Economic Cooperation and Development (OECD), two private sector entities with worldwide pension-related business and a significant interest in public policy-the ING Group headquartered in the Netherlands and BBVA with headquarters in Spain-and VB, the Dutch Association of Industry-wide Pension Funds. Although not formally members of the partnership, the American Council of Life Insurers (ACLI), which provided funding, and the U.K. Department for Work and Pensions, through a staff secondment to the OECD, also supported the work. The partnership represents a promising approach to organizing and financing policy research on issues of importance to international policy and research institutions and the business community. The project originated with a proposal from ING to engage in a research partnership with the World Bank, first made in 2002. It exemplifies the Dutch ideal of collective effort and public-private cooperation. Over the course of the ensuing two years, the partnership that was formed was extended to include the other institutions, and a program of research emerged from the discussions among its members.

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“…For instance, one software tool simply presumes that everyone receives the same Social Security benefit, regardless of whether it is a single or married household. Some programs require the user to provide that information, but older workers tend not to be very well apprised as to the level of their future Social Security benefits (Mitchell 1988;Gustman and Steinmeier 2003). Indeed, the research shows that many workers underestimate their Social Security benefit and overestimate how much income they will receive from pensions and work in retirement (Sondergeld and Greenwald 2005).…”

Section: Social Security Benefit Receiptmentioning

confidence: 99%

How Does Retirement Planning Software Handle Postretirement Realities?

Rappaport¹,

Turner²

2010

Reorienting Retirement Risk Management

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Many risks must be managed during the post-retirement period. This chapter explores retirement planning software that provides individuals and advisors the opportunity to perform a range of calculations to help them in retirement planning. We link results from surveys and research by the Society of Actuaries to show how the software handles post-retirement risks. We find that approaches to managing these risks are often not well-integrated. Disciplines Disciplines Economics Comments Comments The published version of this Working Paper may be found in the 2010 publication: Reorienting Retirement Risk Management.

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Labor Market Uncertainty and Pension System Performance

Cited by 9 publications

References 68 publications

Value Creation on Member Contributions in Zambian Pension Funds: Evidence for Imperative Investment in Financial Education

Value Creation on Member Contributions in Zambian Pension Funds: Evidence for Imperative Investment in Financial Education

Evaluating the Financial Performance of Pension Funds

How Does Retirement Planning Software Handle Postretirement Realities?

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