This paper examines the impact of uncertainties in the future trends of mortality on annuity values in Singapore's compulsory purchase market. We document persistent population mortality improvement trends over the past few decades, which underscores the importance of longevity risk in this market. Using the money's worth framework, we find that the life annuities delivered expected payouts valued at 1.019–1.185 (0.973–1.170) per dollar of annuity premium for males (females). Even in a low mortality improvement scenario, the annuities provide an expected value exceeding 0.950. This suggests that participants in the national annuity pool have access to attractively priced annuities, regardless of sex, product, and premium invested.

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.

We examine the effect of the partner allowance (PA) in the Dutch pension system on the retirement decisions of couples using administrative data. PA was paid to people who receive the public old-age pension with a partner younger than the state pension age (SPA) and with a low own income. PA worked as a financial incentive to retire earlier, especially for the younger partners. As of 1 April 2015, new old-age pensioners are no longer entitled to this allowance. We estimate the effect of this reform on the retirement behaviour of each spouse. To account for the fact that at the same time, another reform essentially put an end to generous early retirement arrangements, we compare singles and couples. We conclude that PA substantially increased female younger partners' probabilities to exit from part-time employment into retirement close to the older partner's SPA. On the other hand, there is no evidence that male younger partners (either full-time or part-time workers) responded to the PA reform. In addition, PA increased male older partners’ probabilities to retire in the years before reaching their SPA.

In collective pension arrangements without a sponsor guarantee, assets and liabilities are commingled, and members' benefits are adjusted to reflect emerging plan experience. Stakeholders pay attention to the fairness of the intergenerational transactions arising from the inclusion of certain design elements; however, implicit intergenerational transactions exist even in pure collective defined contribution (CDC) arrangements without any such explicit stabilization mechanisms. In this study, we find that the implicit risk transactions are uneven: significant value transfers among cohorts can result from joining a pure CDC plan. We then compare these to the additional value transfers arising from explicit stabilization mechanisms.

This paper introduces an integrated asset-liability management model that allows for the joint quantitative analysis of capital structure choices, pension fund allocation decisions and rational pricing of liabilities. We confirm that capital structure decisions have a substantial impact on the value of pension claims, and we provide a quantitative assessment of the mispricing induced by the use of an arbitrary regulatory discount rate. We also present a quantitative assessment of the asset substitution effect implied by a change in the pension fund allocation to risky assets taking place after the corporate and pension obligation claims have been issued.

Using Health and Retirement Study data linked to summary plan descriptions and W-2s, this study reports trends in retirement wealth inequality of older employees 1992–2010. The study identifies and corrects methodological flaws in past research. Retirement wealth is highly unequally distributed; the top lifetime earnings quintile holds half of all retirement wealth, the bottom quintile, only 1%. The top earnings quintile fared better in 2010 than in 1992, whereas bottom-quintile earners fared worse. But retirement wealth inequality mainly reflects inequality within earnings quintiles, resulting from inadequate savings, not outsize accumulations. Systemic flaws reduce median retirement wealth by 84%

Many states enhanced benefits in teacher retirement plans during the 1990s. This paper examines the school staffing effects of one such enhancement in a major urban school district with mostly high poverty schools. Pension rule changes in 1999 for St. Louis public school teachers resulted in large increases in pension wealth for active teachers, as well as a powerful increase in ‘push’ incentives for earlier retirement. Simple descriptive statistics on retirement patterns before and after the enhancements suggest much earlier retirement resulted. Shorter teaching spells imply a steady state with more teacher turnover and a larger share of novice teachers in classrooms. To better understand the long-run effects of these changes and alternative policies, the authors estimate a structural model of teacher retirement. Simulations of retirement behavior for representative senior teachers point to shorter completed teaching spells and earlier retirement age as a result of the enhancements. By contrast, moving from the post-1999 to a DC-type plan would extend the teaching career of a representative senior teacher by roughly two years.

We field a large online survey to study preferences and hypothetical product choices for phased withdrawal accounts and compare their demand to the demand of annuities. We find that most individuals prefer phased withdrawal accounts with dynamic withdrawal rates and equity-based asset allocation. Additionally, when offered the opportunity to exchange the phased withdrawal account with an annuity, most individuals decline to annuitize. Our results suggest that policymakers should consider offering combined solutions of phased withdrawals and annuities. Retirees who are averse to full annuitization could preserve some of their accumulated wealth while also acquiring protection against longevity risk.

Willingness to participate in financial markets is important for financial well-being, including the accumulation of retirement savings through self-directed pension programs. We consider the roles of two key factors, trust and financial literacy in financial market participation. We find both are strongly related to participation. Although trust is more uniformly correlated with increases in financial market participation, the relationship between financial literacy and engagement is u-shaped, with increases in financial literacy first associated with reductions and subsequently with increases in the levels of participation. Our findings suggest trust and financial literacy play different roles and that each is related to investment behaviors in important ways.