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This paper utilizes the county-by-county rollout of China’s New Rural Pension Scheme (NRPS ) and finds that, among age-eligible people, the pension scheme leads to higher household income and food expenditure, less farmwork, better health, and lower mortality. In addition, the NRPS shifts age-ineligible adults from farmwork to nonfarmwork but does not significantly affect their income, expenditure, or health. No significant evidence shows that the NRPS affects private transfers or health behaviors. These findings provide relevant evidence of the impacts of social pensions on individual behaviors and welfare for developing countries today and developed countries in the past.

Remarking on the discourse of pension management in Nigeria, scarce research attention can be traced to the understanding of pension management challenges and life after retirement experience through the prism of policy implication. To address this gap, the study assesses the pattern of pensioners’ life after retirement, the arrays of pension management challenges, and appropriate policy implications for effective pension management. A mixed-method research approach was employed. 345 retirees were randomly recruited and administered a questionnaire, and 18 purposively semi-structured interviews were conducted with the Federal Parastatals and Private Sector Pensioners Association of Nigeria. Quantitative data were analyzed with the frequency distribution and the Q-Q plot to determine the normal probability plot, while the NVivo (12) qualitative software was used for the identification of themes and sub-themes from the transcribed data. Findings revealed prolonged health challenges, poverty, and abrupt pension payment as life after retirement experiences. Verification bottleneck, poor monitoring and evaluation efforts, and administrative incompetency were issues around pension management challenges. The implication includes addressing political interference in pension management and administration, safeguarding retirees’ savings through legal commitment, and a call for employers’ contributions. The study recommends that the National Pension Commission become more responsive in its role of providing quality pension service, especially in terms of quality leadership, monitoring, and evaluation of Pension Fund Administrators.

This paper studies the optimal design of a pension system together with publicly provided individualized financial education. Agents can invest in both a risky and a non-risky asset and can either under- or over-estimate the expected return of the risky asset. We show that, under perfect information on the misperception biases, it is optimal for the government to impose a uniform level of pension contributions equal to the optimal level of investment in the riskless asset and a U-shaped level of mandatory education. Under asymmetric information, we show that the level of education is always distorted upward for agents with important misperception biases (who either under- or over-estimate financial returns), but can be distorted upward or downward for agents with mild misperception biases. Whether we end up in one or the other situation depends on the size of the public and private costs of education as well as on the shape of the distribution of the misperception biases in the economy.

Tontines, retirement products constructed in such a way that the longevity risk is shared in a pool of policyholders, have recently gained vast attention from researchers and practitioners. Typically, these products are cheaper than annuities, but do not provide stable payments to policyholders. This raises the question whether, from the policyholders' viewpoint, the advantages of annuities and tontines can be combined to form a retirement plan which is cheaper than an annuity, but provides a less volatile retirement income than a tontine. In this article, we analyze and compare three approaches of combining annuities and tontines in an expected utility framework: the previously introduced “tonuity”, a product very similar to the tonuity which we call “antine” and a portfolio consisting of an annuity and a tontine. We show that the payoffs of a tonuity and an antine can be replicated by a portfolio consisting of an annuity and a tontine. Consequently, policyholders achieve higher expected utility levels when choosing the portfolio over the novel retirement products tonuity and antine. Further, we derive conditions on the premium loadings of annuities and tontines indicating when the optimal portfolio is investing a positive amount in both annuity and tontine, and when the optimal portfolio turns out to be a pure annuity or a pure tontine.

For insurance companies in Europe, the introduction of Solvency II leads to a tightening of rules for solvency capital provision. In life insurance, this especially affects retirement products that contain a significant portion of longevity risk (e.g., conventional annuities). Insurance companies might react by price increases for those products, and, at the same time, might think of alternatives that shift longevity risk (at least partially) to policyholders. In the extreme case, this leads to so-called tontine products where the insurance company’s role is merely administrative and longevity risk is shared within a pool of policyholders. From the policyholder’s viewpoint, such products are, however, not desirable as they lead to a high uncertainty of retirement income at old ages. In this article, we alternatively suggest a so-called tonuity that combines the appealing features of tontine and conventional annuity. Until some fixed age (the switching time), a tonuity’s payoff is tontine-like, afterwards the policyholder receives a secure payment of a (deferred) annuity. A tonuity is attractive for both the retiree (who benefits from a secure income at old ages) and the insurance company (whose capital requirements are reduced compared to conventional annuities). The tonuity is a possibility to offer tailor-made retirement products: using risk capital charges linked to Solvency II, we show that retirees with very low or very high risk aversion prefer a tontine or conventional annuity, respectively. Retirees with medium risk aversion, however, prefer a tonuity. In a utility-based framework, we therefore determine the optimal tonuity characterized by the critical switching time that maximizes the policyholder’s lifetime utility.

One problem for sustainability of systems pensions is how people without specialized financial training could manage their resources and their actual personal intentions towards retirement. Research objective is to analyse the relationship among several factors that affect the behaviour towards retirement, the financial management practices and the financial resources, by carrying out a structural equation model (SEM) that was tested in Spanish workers sample in three phases.  The influence of financial literacy, financial retirement objectives, optimism on retirement, tolerance to financial risk, and the commitment to financial planning at time 1, are analysed as explanatory variables of financial management practices at time 2. Financial resources for retirement at time 3 are explained by financial management practices. According to results, the model can predict the 36% of the variance of financial management practices and 53% of the variance of financial resources for retirement. Thus, the model can be used for checking of knowledge of the personal financial behaviour before retirement, what enables a better personal financial planning. It would be possible to apply a model based on self-assessment in order to implement a complementary financial planning that would allow to maintain the welfare during retirement. First published online 30 December 2020

We examine whether an individual's inability to save in the last 12 months affects the extent to which they are concerned about their future financial security and their propensity to plan for retirement. We use an original survey based upon representative samples of working individuals in 16 countries. We show that individuals who were unable to save over the 12-month period prior to the survey are less likely to consider well-being in retirement as their major financial concern. They are also less likely to invest in supplementary pension funds than those who were able to accumulate savings. We provide evidence that these findings are robust under several specifications and are mediated by respondents' perceived income prospects and assessment of their current financial situations.

The Defined Benefit Division of UniSuper is a large defined benefit superannuation scheme in Australia for public universities. Unlike public service superannuation schemes in Australia, it is not guaranteed by the employers. This has previously led to a reduction in benefits of the scheme due to expected funding shortfalls. This paper examines longstanding and more recent issues with the funding of the Defined Benefit Division. Recent changes to superannuation laws in Australia may result in further benefit reductions for the scheme in the future. Should new eligible employees join the Defined Benefit Division? What form of retirement benefit should be taken by retiring Defined Benefit Division members? The paper examines these two key questions. Employees who are contemplating joining the Defined Benefit Division, or those Defined Benefit Division members about to retire, have some very important decisions to make.2

Many recent pension reforms require individuals to make more decisions on supplementary savings, investment choices, etc. Governments and the pension industry try to assist individuals through pension communication but little is known about the effectiveness of such policies. This paper uses Dutch longitudinal data to analyse the causal links between communication, pension knowledge, and conscious pension decision-making. A robust finding is that pension knowledge has a positive causal effect on active pension decision-making. Providing an annual pension statement might have a small positive effect on pension knowledge, but this result is sensitive to the identifying assumptions.

This study provides empirical evidence on the mechanisms through which financial literacy may be associated with saving for retirement, in the three phases of the decision-making process – information perception, information search and evaluation, and decision-making and implementation. The results indicate that financial literacy has significantly positive effects on one's awareness of post-retirement financial needs, comparing alternatives when purchasing financial products, displaying fewer present-time bias, and planning for and setting aside funds for retirement. Financial literacy not only directly contributes to planning for the future, but also indirectly via a reduction in behavioral biases.