Why a Lump-sum Payment Should be Part of Social Security

Around the world, social-security systems are running out of money. A group of researchers led by Olivia S. Mitchell, Wharton Professor of Insurance/Risk Management & Applied Economics/Policy, and Director of the Pension Research Council, set out to find new ways to get people to delay claiming benefits and work longer. In an experimental survey they found that people would delay claiming benefits for about half a year and work about a third to a half of extra time. Their plan showed that lump sum payments would be popular without costing Social Security extra.

Read more about the study on MarketWatch.com
Working paper available on the PRC Website.

Allianz Asset Management Joins Wharton’s Pension Research Council as Associate Level Member

Olivia S. Mitchell, Director of the Pension Research Council, is pleased to announce that Allianz Asset Management AG | Project M has joined the Council for 2016. Read the full press release here.

The Vanguard Group Joins Wharton’s Pension Research Council as Director Level Member

Olivia S. Mitchell, Director of the Pension Research Council, is pleased to announce that The Vanguard Group has joined the Council for 2016. Read the full press release here.

International Foundation of Employee Benefit Plans Rejoins Wharton’s Pension Research Council as Associate Member

Olivia S. Mitchell, Director of the Pension Research Council, is pleased to announce that The International Foundation of Employee Benefit Plans (IFEBP) has joined the Council for 2016. Read the full press release here.

Prudential Joins Wharton’s Pension Research Council as Director Level Member

Olivia S. Mitchell, Director of the Pension Research Council, is pleased to announce that Prudential has joined the Council for 2016. Read the full press release here.

Special Issue of the Journal of Pension Economics and Finance

In this special issue of the Journal of Pension Economics and Finance, @pensionsjournal offers several studies on key issues in household finance, including debt, pension, bequest, and life insurance behavior. Other articles explore financial literacy, consumers’ income and pension expectations, hyperbolic preferences, and taxes. Free down loads till July 2016!

Authors include:
Annamaria Lusardi and Peter Tufano
Tullio Jappelli and Mario Padula
James Banks, Rowena Crawford, and Gemma Tetlow
Luc Bissonnette and Arthur Van Soest
Richard Disney, John Gathergood, and Jorg Weber
David Love and Gregory Phelan
Nicholas Sauter, Jan Walliser, and Joachim Winter

To Be Relevant, Annuity Market Must Change

To Be Relevant, Annuity Market Must Change

Matt Carey, co-founder of the online annuity marketplace Abaris and former policy advisor at the US Department of Treasury, discusses the reasons why annuities have failed to fill the gaps between an aging population and the declining portion of Americans with pension plans.

Click here to read the full article.

Fixing The Weakest Link: Strengthening Retirement Security By Default

Fixing The Weakest Link: Strengthening Retirement Security By Default

By: Richard Fullmer – Richard Fullmer is an asset allocation portfolio strategist at T. Rowe Price, where he focuses on research and development of retirement investment strategies, spending strategies, and ways to mitigate longevity risk.

One drawback of defined contribution (DC) retirement plans is that they place the burden of making financial decisions on participants who are often ill equipped for the task. This has contributed to widespread concerns about retirement security. Will people have enough savings when they leave the workforce to afford a comfortable retirement? Will they then draw on their nest eggs efficiently while in retirement, enabling them to avoid financial ruin over an uncertain lifetime?

Click here to read the full article.

The Potential Effect of Offering Lump Sums in the Social Security Program

Political debate has focused on the question of whether Social Security solvency should be achieved by larger benefit cuts or higher taxes, which in effect asks which people—current or future generations—should bear the greater burden of fixing the system.

But new research reframes this debate, offering a budget-neutral, actuarially fair lump sum payment, instead of the current delayed retirement credit, as a way to encourage people to delay claiming their Social Security benefits and work longer.

Under one of the lump sum alternatives presented here, survey participants indicated a willingness to delay claiming Social Security by up to eight months, on average, compared to the status quo, and to continue working for four of them.

Delayed claiming would mean additional months or years of Social Security payroll tax contributions, which could modestly improve the program’s solvency. Other benefits are possible as well: improved physical and mental health among the elderly from extended labor force participation, which could reduce the strain on health care programs like Medicare and Medicaid and help offset the macroeconomic costs of an aging population.

Click here to read the full article.

The New Insurance Supervisory Landscape: Implications for Insurance and Pensions [video]

“The New Insurance Supervisory Landscape: Implications for Insurance and Pensions”

Author: Peter A. Fisher

Abstract — The financial crisis generated significant new regulatory and supervisory architecture to ensure financial stability and enhance consumer welfare. New structures were instituted at the state, provincial, regional, and global levels. While advancing stated primary objectives, these new structures frequently create unintended consequences affecting dimensions of social welfare that lie outside individual supervisory mandates. Unintended effects of new policy and oversight can influence macro-economic growth; availability, quality, and pricing of financial products; returns to capital; and solvency. As a result, new supervisory and regulatory structures can have a variety of ultimate effects on long-term individual financial security, where macro-economic growth, adequate returns to capital, and efficient risk allocation are integral.

Click here to watch on YouTube.