The Impact of Occupation and Gender on Pensions from Defined Contribution Plans

Abstract

We present simulation results for the likely pension outcomes for different definedcontribution (DC) pension plan members distinguished by occupation and gender. While our results suggest that key differences between outcomes depend on the strategic asset allocation strategy chosen (and hence on the rate of return on assets in relation to the growth rate in salaries), we also find that DC plans benefit most those workers who have the highest career average salary relative to final salary or whose salary peaks earliest in their careers. Thus low-skilled workers and women do relatively well from DC plans: the largest median pension difference between occupations is 34 per cent (for men) and 38 per cent (for women), while the largest median pension difference between women and men in the same occupation is 45 per cent (for the same contribution rate). We conclude that key aspects of plan design (in particular contribution rates) should be occupation-and gender-specific.

Turning Pensions Plans into Pension Planes: What Investment Strategy Designers of Defined Contribution Pension Plans Can Learn from Commercial Aircraft Designers

“…The shape of the career salary profile can have a dramatic effect on the size of the pension as Blake et al (2007) have documented. This study suggests that the career salary profile is driven by two key parameters, namely relative career average salary (RCAS) and peak salary age (PSA).…”

Gendering Pensions: Making Women Visible

“…In addition significant research (Blake et al, 2007;Dex 1999;Foster, 2010;Ginn 2003Ginn , 2004Ginn , 2006Ginn , 2008Ginn , 2012Ginn and MacIntye, 2013;Ginn and Aber, 1993Glover and Arber, 1995;Mayer and Bridgen, 2008;Thane, 2006Thane, , 2010Walby, 2009) has demonstrated how disadvantage is sustained throughout women's lives by gendered labour market participation and gender blind institutional mechanisms and practices. The following section will explore this with specific reference to current UK pension policy.…”

“…Furthermore, important empirical and theoretical contributions have been produced regarding the impact upon women of these gendered policies and organizational gender blindness as well as the implications for women's earning capacity and pension entitlements (Blake et al, 2007;Dex 1999;Foster, 2010;Ginn 2003Ginn , 2004Ginn , 2006Ginn , 2008Ginn , 2012Ginn and MacIntye, 2013;Ginn and Aber, 1993Glover and Arber, 1995;Mayer and Bridgen, 2008;Thane, 2002Thane, , 2006Thane, , 2010Walby, 2009). But despite the obvious connections between gender discrimination in the labour market and pension inequality later in life, the subject has received relatively little theoretical attention in the discipline of management and organization studies.…”

Portability, Salary and Asset Price Risk: A Continuous-Time Expected Utility Comparison of DB and DC Pension Plans

“…3 That is, we allow for a possibly time-varying, but deterministic intensity. 4 As already mentioned, we do not model the endogenous choice of job mobility. Neither do we estimate the job intensity.…”

“…[3,4] measure risk in the DC plan by computing VaR estimates during the accumulation phase. They find that the asset allocation strategy mainly drives the asset price risk, since the VaR estimates are considerably more sensitive to the asset allocation strategy than to the choice of the asset return model.…”