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This paper used seven waves of data from the US Health and Retirement Study to investigate the impact of expectations regarding the timing of retirement on pre-retirement wealth accumulation of married households. More specifically, the effect of married individuals’ subjective beliefs of working full time after age 62 on household wealth was analyzed. Individuals’ perceptions of the usual retirement age on the job was used as an instrument for their subjective beliefs of working full time after age 62. On a whole, the point estimates suggested that the responsiveness of married mens’ saving behavior to retirement dates expectations was larger than that of married women. In particular, wealth of married households where men had the bargaining power in terms of being sole earners, exhibited the largest decrease in response to increases in subjective probabilities of working past age 62.

The labor participation rate in Slovenia has been lower than in the EU-15 (the members states prior to May 2004), particularly for the low-income and older individuals. Using simulations of tax and social benefits and public pensions, the paper shows how the current tax, welfare, and pension systems create disincentives to work among these groups. The paper finds that incentives to retire early are strong for men, especially low-wage earners. The marginal effective tax rates also make it costly for low-income individuals to work and negatively affect the probability of participating. The paper proposes reform measures to enhance work incentives and labor participation, which will be crucial for dealing with population aging and for achieving higher potential growth in Slovenia.

Putting the pension system on a sustainable footing arguably remains the biggest challenge in Russia's economic policies. The debate about the policy options was hitherto constrained by the absence of general equilibrium analysis. This paper fills this gap by simulating their macroeconomic effects in a DSGE model calibrated to Russia's economy-the first of its kind to the best of our knowledge. The results suggest that a minimum benefit level in the public system should optimally be financed through lower government consumption, while higher taxation of labor and capital should be avoided. Reducing public investment spending is superior to increasing consumption taxes unless investment generates high rates of return.

This paper reviews the financial implications of aging for the pension system in Belgium during 1995-2050. Our simulations indicate a strong rise in pension expenditure over the next half century, as is the case in other industrialized countries. In Belgium, the problem is particularly acute in the pension system for civil servants. The impact of amending indexation of pension benefits and their ceilings, of harmonizing pension schemes for public and private sector employees, and of increasing the mandatory retirement age is discussed. We also calculate rates of return on the participation in the Belgian pension system and present some evidence on the intergenerational impact of the different reform options.

This paper analyzes the economic rationale for adopting parametric pension reforms and reforms broadening the coverage of public health care in Colombia during 1993-2008. Parametric pension reforms have focused on increasing the retirement age and moderating replacement rates. The health system reforms aimed at reaching universal coverage by 2012, while providing a more homogenous level of services. Our results indicate that the Net Present Value of the debt of the social security system in Colombia is roughly 160 percent of GDP for pensions and about 97 percent of GDP for the health system.

The recent financial crisis is challenging the reform approach to mandated pension a scheme that has emerged over recent decades across the world. This reform approach is characterized by a move toward multi-pillar pension systems and includes the creation or extension of a mandatory funded pillar with defined contribution design. The rationale and viability of such a pillar is contingent on an enabling environment and the delivery of high risk-adjusted net rates of return that beat the natural benchmark, which is the internal rate of return that an unfunded mandated scheme is able to achieve. Two key aspects of mandated and funded defined contribution schemes have been under discussion and investigation since dedicated pension funds were created: (a) the high fees levied by privately organized pension funds and the consequence for the net rate of return; and (b) the investment products of these funds and their capability to address the investment risks and to deliver the expected retirement income in a life-cycle context. To this end, country policies have experimented with a variety of approaches to improve outcomes with some important leads but overall modest results. This book proposes to take a fresh and highly innovative look at both policy issues. It suggests stepping back and looking at the underlying causes of the issues at stake instead of merely trying to address their symptoms. In addressing the high fees of pension funds, it focuses on the less-than-ideal conditions inert consumers facing firms with market powers and proposes to apply solutions derived from industrial organization models and pricing methods that better reflect the cost structure of the supply of pension services. In addressing the investment risks, it asks how to improve fund managers' risk-adjusted investment performance when participants are inert.

Background Several studies regarding the effect of retirement on physical as well as mental health have been performed, but the results thereof remain inconclusive. The aim of this review is to systematically summarise the literature on the health effects of retirement, describing differences in terms of voluntary, involuntary and regulatory retirement and between blue-collar and white-collar workers. Methods A search for longitudinal studies using keywords that referred to the exposure (retirement), outcome (health-related) and study design (longitudinal) was performed using several electronic databases. Articles were then selected for full text analysis and the reference lists of the selected studies were checked for relevant studies. The quality of the studies was rated based on predefined criteria. Data was analysed qualitatively by using a best evidence synthesis. When possible, pooled mean differences and effect sizes were calculated to estimate the effect of retirement on health. Results Twenty-two longitudinal studies were included, of which eleven were deemed to be of high quality. Strong evidence was found for retirement having a beneficial effect on mental health, and contradictory evidence was found for retirement having an effect on perceived general health and physical health. Few studies examined the differences between blue- and white-collar workers and between voluntary, involuntary and regulatory retirement with regards to the effect of retirement on health outcomes. Conclusions More longitudinal research on the health effects of retirement is needed, including research into potentially influencing factors such as work characteristics and the characteristics of retirement.

Target date funds (TDFs) provide retirement investors, many of whom are unsophisticated or inattentive, with age-appropriate exposures to different asset classes like stocks and bonds. To maintain exposures, TDFs trade actively against market returns, buying stock funds when the stock market does poorly, and selling when the market does well (Parker et al ., 2023, Journal of Finance ). This paper shows that trading by TDFs was a significant stabilizing force in US equity markets during the unprecedented economic volatility of the COVID-19 pandemic period. Specifically, TDFs – now comprising a quarter of all 401(k) plan assets – caused significant contrarian investment flows across asset classes, flows that were not undone by enrollment of TDF investors or by discretionary actions by TDF managers. Mutual funds with large ownership by TDFs had more stable funding through the pandemic, and stocks that had greater indirect ownership by TDFs had lower co-movement with the market and lower volatility during the pandemic period.

There are significant differences in the performance of Target Date Funds (TDFs) with the same target year. Using a unique dataset from Morningstar, we show that within the same target year, funds with lower than the average expense ratio, or higher than average allocation to equities, outperform similar funds. This outperformance exists across all target year groups and is economically meaningful. Furthermore, deviations in the equity allocation have a greater impact on performance than does expense ratio. Using bootstrap simulations to investigate the impact over a longer horizon, we show that deviations from the average allocations or expense ratios have a meaningful impact on the retirement savings of an average investor.