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SOCIAL SCIENCE RESEARCH NETWORK
E M P L O Y E E B E N E F I T S , C O M P E N S A T I O N
& P E N S I O N L A W
Vol. 7, No. 24: August 24, 2006
Editors: PAMELA J. PERUN
Urban Institute
PAMELA@PLANETNOW.COM
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Topic of This Issue:
International Perspectives on Retirement
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T A B L E O F C O N T E N T S
"US Retirement Income System"
LAWRENCE H. THOMPSON
Urban Institute
"Retirement Expectations, Pension Reforms, and Their Impact on
Private Wealth Accumulation"
RENATA BOTTAZZI
Institute for Fiscal Studies (IFS)
TULLIO JAPPELLI
Università degli Studi di Salerno - Centre for Studies
in Economics and Finance (CSEF), Centre for Economic
Policy Research (CEPR), European Corporate Governance
Institute (ECGI)
MARIO PADULA
Università degli Studi di Salerno - Centre for Studies
in Economics and Finance (CSEF)
"Retirement in the UK"
JAMES BANKS
Institute for Fiscal Studies & University College
SARAH SMITH
Institute for Fiscal Studies (IFS), University of
Bristol
"The Chilean Pension Reform Turns 25: Lessons from the Social
Protection Survey"
OLIVIA S. MITCHELL
University of Pennsylvania - Insurance & Risk Management
Department, National Bureau of Economic Research (NBER)
ALBERTO ARENAS DEMESA
University of Chile
DAVID BRAVO
University of Chile
JERE R. BEHRMAN
University of Pennsylvania - Department of Economics
PETRA TODD
University of Pennsylvania - Department of Economics,
National Bureau of Economic Research (NBER),
"The Swedish Experience with Pension Reform"
ANNIKA E. SUNDÉN
Stockholm University - Swedish Institute for Social
Research (SOFI)
"Early Retirement, Social Security and Well-Being in Germany"
AXEL H. BÖRSCH-SUPAN
University of Mannheim - Department of Economics,
National Bureau of Economic Research (NBER), Centre for
Economic Policy Research (CEPR)
HENDRIK JÜRGES
University of Mannheim - Mannheim Research Institute for
the Economics of Aging (MEA)
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"US Retirement Income System"
Oxford Review of Economic Policy, Vol. 22, No. 1, pp.
95-112, 2006
Contact: LAWRENCE H. THOMPSON
Urban Institute
Email: LTHOMPSO@UI.URBAN.ORG
Auth-Page: http://ssrn.com/author=257704
Full Text: http://ssrn.com/abstract=906506
ABSTRACT: In the United States, retirement income is supplied
through the combination of a relatively modest, contributory
social insurance programme; employer-provided (increasingly
defined contribution savings) programmes; and individual
retirement savings. The public programme supplies the vast
majority of the income of the poorer half of the aged population;
only the richest 20 per cent receive more from employer plans
than from the public programme. Projections show that the public
programme will have financial problems in the 2030s. Thereafter,
revenues would have to be increased by a third or benefits cut by
a quarter to restore financial balance. Despite widespread angst
about the impact of longer lifespans and the retirement of the
baby-boom generation, however, there is little serious discussion
about how either the public- or private-sector programmes should
be adjusted. In 2005, President Bush failed to generate
significant public support for a plan partially to privatize the
public-sector programme.
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"Retirement Expectations, Pension Reforms, and Their Impact on
Private Wealth Accumulation"
CFS Working Paper No. 2006/10
Contact: RENATA BOTTAZZI
Institute for Fiscal Studies (IFS)
Email: renata_b@ifs.org.uk
Auth-Page: http://ssrn.com/author=482077
Co-Author: TULLIO JAPPELLI
Università degli Studi di Salerno - Centre for
Studies in Economics and Finance (CSEF), Centre for
Economic Policy Research (CEPR), European Corporate
Governance Institute (ECGI)
Email: tullioj@tin.it
Auth-Page: http://ssrn.com/author=31881
Co-Author: MARIO PADULA
Università degli Studi di Salerno - Centre for
Studies in Economics and Finance (CSEF)
Email: mpadula@unisa.it
Auth-Page: http://ssrn.com/author=328841
Abstract: http://ssrn.com/abstract=906999
ABSTRACT: We estimate the effect of pension reforms on
households' expectations of retirement outcomes and private
wealth accumulation decisions exploiting a decade of intense
Italian pension reforms as a source of exogenous variation in
expected pension wealth. The Survey of Household Income and
Wealth, a large random sample of the Italian population, elicits
expectations of the age at which workers expect to retire and of
the ratio of pension benefits to pre-retirement income between
1989 and 2002. We find that workers have revised expectations in
the direction suggested by the reform and that there is
substantial offset between private wealth and perceived pension
wealth, particularly by workers that are better informed about
their pension wealth.
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"Retirement in the UK"
Oxford Review of Economic Policy, Vol. 22, No. 1, pp. 40-56,
2006
Contact: JAMES BANKS
Institute for Fiscal Studies & University College
Email: J.W.BANKS@UCL.AC.UK
Auth-Page: http://ssrn.com/author=82390
Co-Author: SARAH SMITH
Institute for Fiscal Studies (IFS), University of
Bristol
Email: S.L.Smith@lse.ac.uk
Auth-Page: http://ssrn.com/author=336398
Full Text: http://ssrn.com/abstract=906424
ABSTRACT: In common with other OECD countries, the UK experienced
more than two decades of declining labour-market activity among
older men from the 1970s to the early 1990s, a trend that has
only recently shown signs of being reversed. Retirement decisions
are heavily shaped by institutional context and in the UK this
has led to there being two distinct groups with very different
"retirement" experiences. At the top of the wealth distribution,
early retirement has typically been influenced by private,
occupational pensions; at the bottom of the wealth distribution
individuals are even more likely to be not working in their 50s,
but do not typically define themselves as retired, and draw on
income support, or more usually, disability benefits.
Policy-makers keen to increase effective retirement ages will
need to consider the very different circumstances of these two
groups.
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"The Chilean Pension Reform Turns 25: Lessons from the Social
Protection Survey"
PRC Working Paper No. 2006-9
Contact: OLIVIA S. MITCHELL
University of Pennsylvania - Insurance & Risk
Management Department, National Bureau of Economic
Research (NBER)
Email: mitchelo@wharton.upenn.edu
Auth-Page: http://ssrn.com/author=41556
Co-Author: ALBERTO ARENAS DEMESA
University of Chile
Email: aarenas@dipres.gob.cl
Auth-Page: http://ssrn.com/author=642893
Co-Author: DAVID BRAVO
University of Chile
Email: dbravo@decon.facea.uchile.cl
Auth-Page: http://ssrn.com/author=24357
Co-Author: JERE R. BEHRMAN
University of Pennsylvania - Department of
Economics
Email: jbehrman@econ.upenn.edu
Auth-Page: http://ssrn.com/author=142109
Co-Author: PETRA TODD
University of Pennsylvania - Department of
Economics, National Bureau of Economic Research
(NBER),
Email: PTODD@ECON.UPENN.EDU
Auth-Page: http://ssrn.com/author=55282
Full Text: http://ssrn.com/abstract=908988
ABSTRACT: In 1980, Chile dramatically reformed its retirement
system, replacing what was an old insolvent PAYGO program with a
new structure that relies heavily on funded defined contribution
individual accounts. In addition, eligibility and benefit
requirements were standardized, and a safety net for old-age
poverty was strengthened. Twenty-five years after this reform,
the Chilean model is being re-assessed, in terms of coverage,
contribution, investment, and retirement benefit outcomes. This
paper introduces a recently-developed longitudinal survey of
individual respondents in Chile, the Social Protection Survey (or
Encuesta de Previsión Social, EPS), and illustrates some uses of
this survey for microeconomic analysis of key aspects of the
Chilean system.
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"The Swedish Experience with Pension Reform"
Oxford Review of Economic Policy, Vol. 22, No. 1, pp.
133-148, 2006
Contact: ANNIKA E. SUNDÉN
Stockholm University - Swedish Institute for Social
Research (SOFI)
Email: annika.sunden.1@bc.edu
Auth-Page: http://ssrn.com/author=44117
Full Text: http://ssrn.com/abstract=906508
ABSTRACT: Sweden is one of few countries in Europe to have
introduced a comprehensive pension reform. In 1998, Sweden passed
legislation that transformed its public pension system to a
notional defined-contribution (NDC) plan - that is, a
defined-contribution plan financed on a pay-as-you-go basis. In
addition, a second tier of funded individual accounts was
introduced. The reform had broad political support with more than
80 percent of the votes in parliament. This paper discusses the
trends in retirement in Sweden and assesses the experience with
pension reform. The objective was to design a fiscally
sustainable system tied to economic growth with a clear link
between contributions and benefits. We discuss the challenges in
meeting this goal, the extent to which the Swedish reform has
succeeded, and how the system affects beneficiaries. The paper
evaluates the experience of the individual funded accounts to
date and concludes with an outlook for the future.
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"Early Retirement, Social Security and Well-Being in Germany"
NBER Working Paper No. W12303
Contact: AXEL H. BÖRSCH-SUPAN
University of Mannheim - Department of Economics,
National Bureau of Economic Research (NBER), Centre
for Economic Policy Research (CEPR)
Email: ABS@ECON.UNI-MANNHEIM.DE
Auth-Page: http://ssrn.com/author=234674
Co-Author: HENDRIK JÜRGES
University of Mannheim - Mannheim Research
Institute for the Economics of Aging (MEA)
Email: juerges@mea.uni-mannheim.de
Auth-Page: http://ssrn.com/author=341882
Full Text: http://ssrn.com/abstract=910835
ABSTRACT: This paper investigates the relation between early
retirement and well-being using the GSOEP panel data. The general
picture that emerges from our analysis is that early retirement
as such seems to be related to subjective well-being, in fact
more so than normal retirement. Early retirement most probably is
a reaction to a health shock. Individuals are less happy in the
year of early retirement than in the years before and after
retirement. After retirement, individuals attain their
pre-retirement satisfaction levels after a relatively short
while. Hence, the early retirement effect on well-being appears
to be negative and short-lived rather than positive and long.
Whether this is an effect of retirement itself or a psychological
adaptation to an underlying shock cannot be identified in our
data and remains an open research issue waiting for a more
objective measurement of health.
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