R.P. De Gennaro and D.L. Murphy
Pensions, vol.9, 2004, p.308-316
Doubts about the future of the US public pension system are leading to increased interest in employer-sponsored retirement plans and other investment options. However, the restrictions and rules associated with the various defined contribution plans are confusing and the plans are not without risks. Paper concludes that people should develop a portfolio of retirement savings.
Cambridge Journal of Economics, vol.28, 2004, p.489-504
In many industrial countries population ageing is presumed to make state pensions unsustainable. Article questions this theory and presents some macroeconomic models which show that, given modest changes in the assumptions about long-term employment and wage growth, selected OECD countries could continue to fund their state pensions. Policies aimed at improving employment growth should help support state pension systems. Problems with future pension systems are more likely to arise out of political developments than economic trends .
Journal of Pension Economics and Finance, vol.3, 2004, p.233-253
Paper looks at the internal governance of pension funds emphasizing codes of practice, rules and procedures for decision-making, and trustee competence and expertise. While it is important to observe codes of conduct like those advocated by OECD, there may be significant problems with any system of governance which relies on rules and procedures. Inertia rather than innovation may be the net result. Ultimately, pension fund governance reflects, more often than not, its nineteenth century antecedents rather than the financial imperatives of the twenty-first century.
Journal of Pension Economics and Finance, vol.3, 2004, p.197-232
Conventional wisdom holds that pension reforms from pay-as-you-go to fully funded systems spur development of stock markets through a "corporate governance" channel, i.e. pension funds become large shareholders of publicly traded firms and therefore have incentives to monitor managers and improve investor protection. Article presents a sceptical view of the advocated net social benefits of the supposed positive impact of pension reforms on stock market development. Argues that politically influential corporate interest groups could lobby for pension reforms and pension fund specific capital controls that create a captive source of low cost funds for the companies they control.
Financial Times, Nov. 29th 2004, p.7
US Government finances may have to sink deeper into the red to fund the President's overhaul of social security. The President is in favour of diverting a portion of payroll taxes into personal accounts. This would mean less revenue to fund the benefits of those already at or close to retirement.
A. Brugiavini and V. Galasso
Journal of Pension Economics and Finance, vol.3, 2004, p.165-195
The Italian pension system in place at the end of the 1980s was financed on a pay-as-you-go basis and was unsustainable and extremely unfair to some groups of workers. It enacted a form of perverse redistribution typical of "final salary" defined benefit systems and offered strong incentives for early retirement. Reforms in the 1990s sought to reduce financial imbalances and introduce transparency and equity into the system by linking benefits to contributions. Long-term forecasts suggest that there will eventually be a substantial reduction of pension spending as a fraction of GDP, more in line with the EU average and consistent with the Stability and Growth Pact.