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In this study, we investigate the wealth decumulation decision from the perspective of a retiree who is averse to the prospect of fully annuitizing her accumulated savings. We field a large online survey of hypothetical product choices for phased drawdown offerings and annuities. While the demand for annuities remains low in our sample, we find significant demand for phased withdrawal products with equity-based asset allocations and flexible payout structures. Consistent with the product choice, the most important self-reported considerations for the wealth decumulation decision are low default risk in the products they purchase, the size of the withdrawal rates, and flexibility in the timing of their withdrawal. As determinants of the decision of how much wealth individuals are willing to draw down, we identify consumers' attitudes towards future economic conditions, the extent to which they are protected against longevity risk, and their desire to leave bequests. Policy implications are discussed.

This paper examines how unemployment late in workers' careers affects the timing of their retirement. Using data from the Survey of Income and Program Participation from 1996 to 2011, we document that unemployed workers permanently leave the labor force at a significantly higher rate than employed workers. This effect is stronger once workers become eligible for social security benefits and it is significantly dampened by the eligibility for unemployment insurance benefits. Unemployed workers, particularly those workers in households with below median wealth, also have a significantly higher social security uptake rate shortly after turning 62 than employed workers. We find little evidence for housing or stock market effects on the timing of retirement.

The U.S. Social Security Disability Insurance (SSDI) program is designed to provide income support to workers who become unable to work because of a severe, long-lasting disability. At present, nearly nine million former workers receive SSDI benefits, following several decades of rapid growth. As the program has expanded, observers have debated the degree to which this program growth is due to, on the one hand, past policy changes and anticipated growth in the insured population, or on the other hand, declining returns to labor force participation among low-skilled workers. Underscoring the important role of labor markets is the evidence that SSDI payments in Appalachia responded counter-cyclically to local earnings shocks caused by the coal boom and bust of the 1970s and 1980s (Black, Daniel and Sanders, 2002). More recently, Linder and Burdick (2013) show that the unemployment rate was positively associated with disability benefit claiming during and after the 2001 recession. A finding that SSDI receipt is sensitive to economic cycles is of concern for several reasons. The first is that there is little evidence that the incidence of severe disability is itself countercyclical. Because of this, SSDI is designed to insure against permanent earnings shocks due to onset of disability, and not transitory earnings shocks due to labor market conditions. Its strict eligibility rules, lengthy application processing times, and implicit work disincentives reflect this purpose, and indeed very few SSDI beneficiaries ever return to substantial labor market activity. It is thus problematic if displaced and discouraged workers turn to the SSDI program when they are in need of temporary assistance, since they are unlikely to ever return to work once the labor market recovers. One explanation for these business cycle effects is that they are driven by conditional applicants; that is, workers with health impairments who would prefer to remain in the labor force, but who would apply for SSDI benefits if they lost their present job (Autor and Duggan, 2003). Because applying for public SSDI benefits in the United States requires that one’s earnings are below the threshold defining substantial gainful activity (SGA), the opportunity cost of applying for benefits is reduced when one becomes unemployed. Thus, not only should there be more SSDI applicants during economic downturns, there should be notable compositional differences between those who apply during economic expansions and those who apply during economic recessions. Using survey data, Coe and Rutledge (2013) find that SSDI applicants during recessions have higher past earnings and more recent work experience (see also Lindner and Burdick, 2013). In this study, we use administrative data to estimate the effect of labor market conditions, as measured by the unemployment rate, on the number of SSDI applications, the number and composition of initial allowances and denials, and the timing of applications relative to disability onset. We analyze the period of the Great Recession, and compare this period with business cycle effects over the past two decades, from 1992 through 2012. Our analysis isolates the quantity and composition of applicants who are induced to apply for SSDI benefits when labor market opportunities decline, and therefore provides important new evidence about the group for whom SSDI application is a substitute for labor force participation, and their impact on the SSDI program.

A tanulmány empirikusan elemzi a nyugdíjkorhatár emelésének azonnali foglalkoztatási hatását. Az általános korhatár születési évjáratokhoz és nemekhez kötődő és egyik évről a másikra élesen változó 1997 és 2009 közötti emelkedése teszi lehetővé az oksági kapcsolat hiteles vizsgálatát a különbségek különbsége módszerével. Az eredmények azt mutatják, hogy az előrehozott nyugdíjkorhatár változása jelentős hatást gyakorolt a női foglalkoztatásra: az átlagosan 45 százalékos foglalkoztatási arány mintegy 5-7,4 százalékponttal emelkedett. A korbetöltött nyugdíjazás esetében ilyen hatás nem figyelhető meg. Ennek oka az, hogy a rokkantnyugdíjazás növekedése ellensúlyozta az öregségi nyugdíj igénybevételének csökkenését.* Journal of Economics Literature (JEL) kód: H31, H55, J14, J26., The paper provides empirical evidence of the effect of changing the retirement age on employment. Based on individual data from Hungary, where the retirement age rose in a number of stages between 1997 and 2009, the analysis benefits from substantial variation in pension eligibility over a relatively short time. It takes a difference/indifference approach and is supported by independent variation in the age-based eligibility rule that contributes to causal identification of the effect. Results suggest that the effect of the changes in early retirement age is substantial, amounting to a 5-7.4 percentage point increase in the 45 per cent employment rate of retirement-age women. Changes in the normal retirement age do not seem to have such an employment effect, because they are counteracted by increases in disability pension claims.

A fogyasztás finanszírozásának intézményi összetétele az életciklus két eltartotti szakaszában - gyermekkorban és időskorban - eltérő. Sarkosan fogalmazva: a gyermekeket a szüleik nevelik fel, az idősek pedig a társadalomra támaszkodnak. Tekintve, hogy az erőforrások háztartásokon belüli és háztartások közötti elosztását a nemzeti számlák nem rögzítik, a gyermekekre fordított erőforrások többsége nem látható, szemben az időseknek juttatott forrásokkal, amelyek viszont szinte teljes egészükben megjelennek a nyilvános statisztikákban. Elemzésünkben a nemzeti számlák egy új ágát, a nemzeti transzferszámlákat - amelyek felölelik a háztartásokon belüli és a háztartások közötti magántranszfereket -, továbbá ennek kísérleti jelleggel kiterjesztett változatát, a nemzeti időtranszferszámlát alkalmazzuk. Utóbbi a nem fizetett háztartási munkára szánt idő értékét számszerűsíti, és megbecsli annak mértékét, hogy az egyes korosztályokhoz tartozó családtagok milyen értékű munkát végeznek a más korosztályokhoz tartozó családtagok javára.* Journal of Economic Literature (JEL) kód: D13, E01, H55, H83, J13, J14., The authors argue for a difference in the institutional composition of funding consumption in the two dependent sections of the life cycle: childhood and old age. Children are raised by parents; the elderly rely on society. Since reallocations of resources within and between households are not registered in the national accounts, most of the resources transferred to children are not visible, whereas resources flowing to the elderly show almost completely in public statistics. The analysis applies a recent extension of the national accounts - National Transfer Accounts - which includes private transfers, and a further, experimental extension - National Time-Transfer Accounts - which quantifies the value of time transferred among household members as unpaid household labour. It appears that less than one-third of the full transfer package to children is registered in the national accounts and around another one-third is made visible by National Transfer Accounts. The remaining third, the value of parents caring for their children, is revealed by National Time Transfer Accounts. The corresponding shares in funding old age are different: 90 per cent appear in public statistics and the two accounting extensions reveal only a little less than 10 per cent. (The paper first appeared in the Journal of the Economics of Ageing.)

We study the short-, medium-, and long-run implications of stimulating annuity markets in a dynamic general-equilibrium overlapping-generations model. We find that beneficial partial-equilibrium effects of stimulating annuity markets are counteracted by negative general-equilibrium repercussions. Balancing the positive partial-equilibrium and negative general-equilibrium forces we show that there exists an intermediate level of annuitization such that the lifetime utility of steady-state agents is maximized. Studying the transition to this optimal degree of annuitization shows that currently middle-aged individuals stand to gain most from the stimulation of annuity markets. Complementing our main analysis, we highlight the centrality of the interplay between human-capital accumulation and annuity market policy.

This paper exploits the effectively random assignment of judges to Disability Insurance cases to estimate the causal impact of Disability Insurance receipt on labor supply. We find that benefit receipt reduces labor force participation by 26 percentage points three years after a disability determination decision, although the reduction is smaller for older people, college graduates, and those with mental illness. OLS and instrumental variables estimates are similar. Furthermore, over 60 percent of those denied benefits by an administrative law judge are subsequently allowed benefits within ten years, showing that most applicants apply, reapply, and appeal until they get benefits. (JEL H55, J14, J22, K23)

Elderly individuals exhibit wide disparities in their sources of income. For those in the bottom half of the income distribution, Social Security is the most important source of support; program changes would directly affect their well-being. Income from private pensions, assets, and earnings are relatively more important for higher-income elderly individuals, who have more diverse income sources. The trend from private sector defined benefit to defined contribution pension plans has shifted responsibility for retirement security to individuals. A significant subset of the population is unlikely to be able to sustain their standard of living in retirement without higher pre-retirement saving.

Incorporating heterogeneity in preference to having children into an overlapping generations model of a small open economy, we examine the effects of changes in the size of payasyougo (PAYG) social security on fertility choices of individuals and population growth of the economy. It is shown that PAYG social security will raise population growth by increasing the number of individuals who have children and the number of children parents have if the system involves redistribution between retirees with different contributions, whereas, if it has no redistribution, PAYG social security does not affect the fertility decisions of individuals.

Across the industrialized world, health and mortality gradients by education and income have generally been steepening (Crimmins and Saito 2001; Meara, Richards, and Cutler 2008; Goldman and Smith 2011). The leading explanations for the increased gaps in life expectancy involve differential trends in smoking, diet and exercise, stress, chronic disease management, and access to health care. Less well known, however, is the impact these trends will have on public programs and their progressivity—especially Social Security and Medicare. To fill this gap, this paper uses the Future Elderly Model (FEM), a microsimulation model of health and economic outcomes for older Americans, to estimate the effects of steeper mortality gradients on the progressivity of Social Security and Medicare benefits.

Groezen-Leers-Meijdam [2003] cikkéből kiindulva a lehető legegyszerűbben modellezzük a következő problémát: a kormányzat gyermektámogatási és nyugdíjrendszert működtetve serkenti a dolgozókat gyermekszülésre, és nyugdíjjal pótolja a "rövidlátó" dolgozók elégtelen megtakarítását. Bevezetjük a dolgozók hitelkorlátját, és kiterjesztjük a szerzőhármas elemzését heterogén nevelési költségekre és gyermektámogatásokra. Két fő eredményünk: 1. a transzferrendszer növelésekor át kell ugrani azt a szakadékot, amely a jólét kezdeti csökkenése miatt keletkezik; 2. bár a termékenységfüggő nyugdíjak bevezetése növeli az átlagos termékenységet, de csökkenti a társadalmi jólétet, és erősítheti a termékenység heterogenitását. Journal of Economic Literature (JEL) kód: D10, H55, J13, J14, J18, J26., Starting out from the study by Van Groezen, Leers and Meijdam (2003), the author analyses the following problem in the simplest possible model: the government operates family-support and pension systems to raise fertility and replace insufficient old-age saving of myopic workers respectively. Hungary imposes credit constraint on workers, and this paper extends the studys analysis to heterogeneous rearing costs and to enjoyment of having children. Two major results emerge. (i) Enlarging the transfer system involves jumping the gap created by the initial drop in welfare needs. (ii) Although the introduction of fertility-dependent pensions raises average fertility, it diminishes social welfare and may strengthen heterogeneity in fertility.

In seinem Kommentar nimmt Eckart Bomsdorf, Universität zu Köln, Stellung zu den Rentenreformplänen der Bundesregierung. Seiner Meinung nach enthält der Gesetzesentwurf sowohl Positives, z.B. bei der Erwerbsminderungsrente, als auch Widersprüchliches, z.B. bei der sogenannten Rente mit 63. Die volle Rentenkasse verführe zu Wohltaten. Vernachlässigt werde, dass die Belastungen für die Rentenversicherung dauerhaft seien, die in der Rentenkasse vorhandenen Ersparnisse jedoch nur einmal ausgegeben werden könnten.

The aging process we are witnessing in the majority of developed countries is raising financial sustainability problems in the pay-as-you-go pension system. The reforms designed to re-establish the financial equilibrium of pension systems may put one of the most important objectives of these systems at risk: to reduce the poverty rate among the elderly. This paper studies the effects that the reforms implemented in the Spanish pension system would have on the poverty rate of the retired population. The two main novelties presented are the following. First, the collective under study is focused on the most vulnerable workers. Second, the effects of the reforms are studied taking into account the labour market situation of the individuals in the years prior to retirement.

The aging of the US population undoubtedly will be associated with macroeconomic changes. In particular, some combination of lower consumption growth and increased labor input will ultimately be required. But, the timing of these changes can have important effects on variables like the rate of return to capital and wages. If the adjustment to consumption is slow, which would be the case if budget deficits were allowed to rise significantly as the population ages, then aging is likely to be associated with an increase in the return to capital and a reduction in wages.

The authors present the first estimates of the causal effects of Social Security Disability Insurance (SSDI) receipt on labor supply that are generalizable to the entire population of program entrants in the present day system. They take advantage of a unique workload management database to match SSDI applicants to disability examiners, and use natural variation in examinersÕ allowance rates to estimate the labor supply effects of SSDI. Because applicants are randomly assigned to examiners (conditional on observable characteristics), examiner specific allowance rates can be used to instrument for the allowance decision in a labor supply equation contrasting denied vs. allowed applicants. They find that the labor force participation rate of the marginal entrant would be on average 21 percentage points greater in the absence of SSDI benefit receipt. His or her likelihood of engaging in substantial gainful activity as defined by the SSDI program would be on average 13 percentage points higher, and he or she would earn $1,600 to $2,600 more per year on average in the absence of SSDI benefit receipt. The marginal entrant is likely to have a mental impairment, be young, and have low pre-onset earnings. Importantly, the disincentive effect varies across individuals with impairments of different degrees of unobservable severity, ranging from a low of 10 percentage points for those with more severe impairments to a high of 60 percentage points for entrants with relatively less severe impairments.

Immigrants residing among many coethnics are especially likely to receive SSI for a disability when they belong to high SSI take-up immigrant groups. After showing that this relationship cannot be fully explained by differences in health, we consider the likely sources of these network effects by separately examining their role in the decision to apply for SSI and, conditional on applying, their role in determining who ultimately receives benefits. Our results suggest that networks may increase the probability of applying for SSI despite minor disabilities, but it is unlikely that network effects are driven by egregious lies on applications.

The subject matter of the study is an analysis of the social consequences of increasing the retirement age of women up to 67 years. The discussion on the change in the retirement age is usually focused on its economic and financial aspects, hence a deeper scientific analysis is needed in relation to the social repercussions of this operation. The main subjects of the study are as follows: maintenance of equality tendencies in relation to the principles of social justice, changes in the social structure manifested especially on the labour market, social expectations as to employment security for those approaching retirement and development of flexible forms of working, development of incentives encouraging employers to keep current staff or hire new employees of older age, and changes in social roles.

We investigate the responsiveness of individual retirement decisions to changes in financial incentives. A reform increased women's normal retirement age (NRA) in two steps from age 62 to age 63 first and then to age 64. At the same time retirement at the previous NRA became possible at a benefit discount. Since the reform affected specific birth cohorts we can identify causal effects. We find strong and robust behavioral effects of changes in financial retirement incentives. A permanent reduction of retirement benefits by 3.4 percent induces a decline in the age-specific annual retirement probability by over 50 percent. The response to changes in financial retirement benefits varies with educational background: those with low education respond most strongly to an increase in the price of leisure.

Con base en registros administrativos de la seguridad social estimamos indicadores de incentivos al retiro, en una muestra de hombres afiliados al mayor programa de seguridad social de Uruguay, y evaluamos su efecto en el retiro y la jubilación observados entre 1996 y 2004. En línea con los resultados estándar en la literatura, encontramos que la riqueza jubilatoria tiene un efecto positivo y altamente significativo en la probabilidad de retiro. Sin embargwrto, los indic'adores usuales de incentivos al retiro no pre¿sentan el efecto esp457erado. E'n algunas especificaciones los indicadores resultan no significativos y 0liu45en otras presentan el signo contrario al esperado.

This paper uses data from the Health and Retirement Study to explore the mechanism that underlies the robust relation found in the literature between cognitive ability, and in particular numeracy, and wealth, income constant. We have a number of findings. First, the more valuable the pension, the more knowledgeable are covered workers about their pensions. We suggest that causality is more likely to run from pension wealth to pension knowledge, rather than the other way around. Second, most measures of cognitive ability, including numeracy, are not significant determinants of pension and Social Security knowledge. Third, standardizing for incomes and other factors, a pension of higher value does not substitute for other forms of wealth. Rather, counting pensions in total wealth, those with more valuable pensions save more for retirement, other things the same. Fourth, there is no evidence that wealth held outside of pensions is influenced by knowledge of pensions. In sum, numeracy does not influence wealth in whole or in part by affecting financial knowledge of one's pension plan, where financial knowledge of the pension then influences other decisions about retirement saving. These findings raise questions about the mechanism that underlies the relation between cognition, especially numeracy, and wealth. From a policy perspective, they suggest that the numeracy-wealth relation should not be taken as evidence that increasing financial literacy will increase the wealth of households as they enter into retirement.

The economic theory of fertility acknowledges the importance of old age pensions for individual fertility decisions. However, theoretical predictions regarding the sign of this relation differ from altruistic fertility models (positive) to non-altruistic fertility models (negative). First, a cointegration analysis is employed in order to check if there is a long-term equilibrium relationship between public spending on old age pensions and the fertility rate, using a sample of 30 European countries. Second, this relation is estimated using the generalized method of moments for dynamic panel data. The results confirm the predictions of altruistic fertility models. Old age pensions public expenditures are found to have a positive effect on the fertility rate, but with a low magnitude.

In economies in which pension obligations are substantial, it is important that there is a high degree of trust in the financial reporting of pensions by employers and by pension plans. The objective of this paper is to assess legal considerations regarding the introduction and implement of financial transaction tax mechanisms in private pension system. In line with this objective, an understanding of causes, implications, solutions for pensions is essential to being able to efficiently and effectively create a secure fiscal environment.

Eckart Bomsdorf, Universität zu Köln, und Jörg Winkelhausen untersuchen die Bevölkerungsentwicklung in Deutschland bis zum Jahr 2060 und bauen auf den Daten der Bevölkerung zum 31. Dezember 2011 auf. Ihre Ergebnisse weisen dar­auf hin, dass – selbst bei einem langfristig deutlichen Bevölkerungsrückgang – die Brisanz nicht in erster Linie im Bevölkerungsrückgang, sondern vor allem in der Veränderung der Altersstruktur der Bevölkerung liegt. Auch die Verschiebung der Regelaltersgrenze in der Rentenversicherung auf 67 Jahre wird langfristig die demographisch induzierten Probleme nicht lösen. Ihrer Ansicht nach kann letztlich nur durch Zuwanderung der Rückgang der Bevölkerung und des Erwerbspersonenpotenzials gedämpft und die Alterung der Gesellschaft begrenzt werden.

This paper describes how a child allowance policy and income transfer to older people policy alter fertility and economic growth under a pay-as-you-go pension system. Moreover, this paper presents ways to finance such policies: one for income taxation and the other for consumption tax. The results presented in this paper are as follows. First, the relation between fertility and economic growth depends on fertility. This relation is positive if fertility is at a certain level. However, if fertility is low or high, this relation is negative. Second, a child allowance does not always raise the fertility rate. On the other hand, income transfer to older people raises the fertility rate. This result underscores that it is important to consider policies for older people when considering how to raise the fertility rate. Income transfer to older people financed by consumption taxation can achieve two goals: increasing fertility in a society with fewer children, and providing income security for older people.

We employ data from the German Socio-Economic Panel to examine the income distribution for elderly individuals since German unification. The elderly population, defined as people of age 55 and older, is decomposed by people resident in the Old and New Federal States. Further, we distinguish non-pensioner and pensioner households. While for non-pensioner households retirement income is lower than employment income, it is the opposite for pensioner households. Inequality estimates are decomposed by income components, and the bootstrap method is used to test for statistical significance of results. Unter Verwendung des Sozio-oekonomischen Panels untersuchen wir, wie sich die Einkommensverteilung für Haushaltsgemeinschaften älterer Personen im Alter von 55 Jahren und älter seit der Wiedervereinigung entwickelt hat. Innerhalb dieser Gruppe unterscheiden wir zwischen Haushaltsgemeinschaften mit Wohnsitz in den Neuen und Alten Bundesländern. Ferner unterscheiden wir zwischen Nichtrentner- und Rentner-Haushalten. Nichtrentner-Haushalte unterscheiden sich von den Rentner-Haushalten dadurch, dass in der erstgenannten Gruppe die Arbeitseinkommen die Renteneinkommen übersteigen. Alle von uns ermittelten Verteilungsmaße sind nach Einkommensarten zerlegt, und mit Hilfe der Bootstrap-Methode testen wir auf statistische Signifikanz.

The recent financial crisis has clearly demonstrated the exposure of defined contribution (DC) pension scheme members to extreme financial market risks. This paper argues that the government might offer DC plan members a minimum return guarantee, funded by risk based premia. Option pricing formulas show that the guarantee could be quite expensive, but public provision could reduce the costs borne by workers. Such an arrangement would be sustainable for the government and would give workers an acceptable benefit/contribution ratio in worst-case scenarios, while still allowing them to reap the advantages of occupational or individual funded pension schemes.

Um die Tragfahigkeit der staatlichen Rentensysteme angesichts der Zunahme der Lebenserwartung langfristig sicherzustellen, haben neben Deutschland auch andere OECD-Staaten in der Vergangenheit das gesetzliche Rentenalter erhoht. Vor diesem Hintergrund stellt der vorliegende Beitrag die Entwicklung des Rentenalters in den Mitgliedsstaaten der OECD im Zeitraum von 1950-2050 dar. Weiterhin wird neben Deutschland fur sechs weitere Mitgliedsstaaten der OECD untersucht, welchen Beitrag die Erhohung des Rentenalters als Teil der nationalen Rentenreformstrategien fur die Tragfahigkeit der offentlichen Finanzen in diesen Staaten geleistet hat. To ensure the sustainability of public pension finances in light of the increase in life-expectancy Germany as well as other OECD countries have decided to raise the statutory retirement age. Against this background, this paper presents the main trends of the development of pensionable ages in OECD countries in the period 1950-2050. Moreover, for Germany as well as for six other OECD countries the paper analyzes the impact of the increase in statutory retirement ages for the sustainability of public finances.

Eckart Bomsdorf, Universität zu Köln, zeigt in dem Beitrag, dass – unter durchaus realistischen Annahmen – von den heute knapp 82 Millionen Einwohnern Deutschlands über 8 Millionen 100 Jahre alt werden könnten.

The present pension systems allocate only a minimal allowance (about 1 or 2% of the total pension budget) to those who raise children, endangering the reproduction of the population and leading to an ageing society. Here we suggest a pension model based on the expenses of child-raising families amounting to 10 to 15% of the total amount of pensions (about 25% of mothers’ pensions). The financial source of this system can be a separated and well-defined ratio of children’s pension contributions paid for at least 13 years until the age of 37. Mothers reaching the retirement age could obtain the suggested pre-determined amount of pension supplement (approximately HUF 140 thousand per children tailored to the demographic and economic conditions in Hungary). According to the financial balance of our model, the net effect on the state pension budget would be negligible. While the total amount of the pension budget with the changes concerning mothers would largely remain unchanged (according to the forecasts), its structure could significantly favour families raising children and it could have a positive impact on the social preferences of the population.

This paper shows the dynamic effects of the reform of the Spanish social security pension system on the pensions received by one of the most vulnerable groups of the population, namely, widows. We undertake a duration analysis to account for the effects of reform over time. We study the effects on the widows? overall financial welfare in terms of the evolution of their risk of poverty. We show that the combined effects of the measures to be implemented will have a positive impact; that is to say, the risk of poverty diminishes with respect to the current financial situation of the widows. However, the risk of poverty increases as the pensioners get older.

This paper investigates the effect of the current recession on the retirement age population. Data from the Health and Retirement Study suggest that those approaching retirement age (early boomers ages 53 to 58 in 2006) have only 15.2 percent of their wealth in stocks, held directly or in defined contribution plans or IRAs. Their vulnerability to a stock market decline is limited by the high value of their Social Security wealth, which represents over a quarter of the total household wealth of the early boomers. In addition, their defined contribution plans remain immature, so their defined benefit plans represent sixty five percent of their pension wealth. Simulations with a structural retirement model suggest the stock market decline will lead the early boomers to postpone their retirement by only 1.5 months on average. Health and Retirement Study data also show that those approaching retirement are not likely to be greatly or immediately affected by the decline in housing prices. We end with a discussion of important difficulties facing those who would use labor market policies to increase the employment of older workers.

Az utóbbi időben élénk szakmai vita alakult ki a tőkefedezeti nyugdíjrendszerrel kapcsolatban. Ezek során még a második pillér megszüntetése is felvetődött. Ezért fontosnak tartjuk a tőkefedezeti rendszer alapkérdéseinek újragondolását. A tőkefedezeti nyugdíjpillér makrogazdasági megközelítése rávilágít arra, hogy a nyugdíjrendszer második pillére nem nyújt önmagában megoldást a társadalom elöregedésére. A nyugdíjasok fogyasztását ugyanis nemcsak a felosztó-kirovó, hanem a tőkefedezeti rendszerben is az aktív népesség megtakarításai fedezik, így komoly problémát jelent az aktív/nyugdíjas arány csökkenése. A részvény- és külföldi befektetések sem oldják meg az elöregedési problémát a tőkefedezeti rendszerben. Ez a rendszer sem képes elkerülni a demográfiai pilótajátékot, a nyugdíjasok számának drasztikus emelkedése ugyanis a felhalmozott vagyonokat elértékteleníti. A nyugdíjpénztárak meghatározó szereplői a belföldi tőkepiacnak, ezért magatartásuk befolyásolja az állampapírpiac helyzetét, a pénzügyi stabilitást, valamint a gazdaság finanszírozásán keresztül a gazdasági növekedést is. Ezért a befektetések rövid távú szemlélete komoly problémát jelent. Fontos kitörési pont lehet a hosszú távú befektetések (például közlekedés, energiaszolgáltatás, klímavédelem, oktatás, egészségügy) súlyának növelése. Journal of Economic Literature (JEL) kód: E24, E44, E66, F21, F36, G23, J14, H55., The lively recent debate on the PAYE pension system has included suggestions for abolish¬ing its second, private pension-fund pillar. For this reason the author sees it as important to reappraise the basic issues of the PAYE system. A macroeconomic approach to the system shows that the second pillar in itself does not resolve the problem of an ageing society. For the consumption of pensioners under the pay-as-you-go and the capital-funded systems is still covered by the savings of the active cohorts, which becomes a serious problem as the proportion of active to pensioned declines. Nor do the equity and foreign investments in the capital-fund coverage system resolve the ageing problem either. The system reduces implicit state indebtedness, but the normally concomitant rise in the explicit state debt leads to a deterioration in investor confidence, which also raises the risk premiums. The pension funds/retirement plans are key players on domestic capital markets and also in economic growth, through their role in financing the economy. So the absence of a short-term approach to the investments or a macroeconomic approach to them, including the criteria of financial stability, poses a serious problem.

Global aging will impose greater economic demands on the young and may entail dramatic consumption shortfalls for the old. Against this gloomy backdrop, many analysts hail the world's funded pension systems as a means to protect future retirement security. The monographs reviewed ask how funded pension plans might be restructured to better meet the policy challenges of global aging. Both show that the pension institution must be reformulated to better provide for both economic growth and demographic aging. Questions remain regarding how retirement policy can better integrate intergenerational adequacy and incentive considerations.

This paper studies the effect of one spouse’s retirement on the Retirement of the other using a Norwegian early reform, which reduced the retirement age for workers in selected firms. The findings indicate that after the reform, the spouses of those who could retire earlier were less likely to remain in the workforce compared to the spouses of those who were not included in the early retirement scheme. This finding is compatible with preferences for shared spousal leisure. Contrary to previous findings, wives respond to husbands’ early retirement decisions. However, the findings are less conclusive with respect to husbands’ response to wives’ early retirement decisions. An investigation of the responding wives’ labor market exit strategy reveals that the reform increased their likelihood of retiring with a disability pension, representing a cost to public finance incurred in addition to the general retirement costs. This study contributes to other recent evidence on the influence of of non-health-related factors on the use of disability benefits among older workers.

Private pension provision faces the challenging task of providing stable income streams during retirement. The challenge has increased markedly in the last decades due to volatile financial markets, falling interest rates and the withdrawal of employers and external insurers as risk bearers of systematic financial and longevity risks. Partly because of these developments, policyholders desire pensions tailored to their individual needs. This paper proposes a new type of pension: the Personal Pension with Risk sharing (PPR). By unbundling and valuing the investment, (dis)saving, insurance and risk-sharing functions of pensions, PPRs allow risk management and (dis)saving to be customized to the specific features of heterogeneous individuals. Moreover, unlike variable annuities, PPRs allow investment risks to be combined with longevity insurance without giving rise to high year-on-year volatility in consumption streams or opaque and rigid valuation and smoothing rules. The unbundling of functions in the PPR also deepens the internal markets for financial and insurance products while at the same time accommodating the diverse traditions of countries in terms of occupational pension provision. Finally, the PPR reconciles financial, fiscal and macroeconomic stability with growth by increasing the supply of long-term risk-bearing and illiquid capital, complementing public retirement provision, reducing the interest-rate sensitivity of pensions and smoothing shocks.

Good news can involve difficult decisions. For example winning a lottery jackpot can go along with the decision, whether to have the jackpot paid out immediately as a lump sum or as periodic annual payments. Also when entering retirement most people face the decision whether they want their defined contribution account balance paid as a lump sum or to annuitize that amount. The fact that people tend to choose the lump sum even if economic reasons suggest that they should choose the annuity is called the annuity paradox. In a large online survey we find that people behave time inconsistent: older people have a stronger tendency to choose the lump sum than younger people when they are asked to predict today what to choose when they retire. This effect is considerably stronger for participants that answer simple time preference questions inconsistently. Our findings suggest to think about precommitment devices for the annuitization decision, in the retirement case, already at the time when the defined benefit plan is started.

The UK has enacted a number of reforms to the structure of disability benefits that has made it a major case study for other countries thinking of reform. The introduction of Incapacity Benefit in 1995 coincided with a strong decline in disability benefit expenditure, reversing previous sharp increases. From 2008 the replacement of Incapacity Benefit with Employment and Support Allowance was intended to reduce spending further. We bring together administrative and survey data over the period and highlight key differences in receipt of disability benefits by age, sex, and health. These disability benefit reforms and the trends in receipt are also put into the context of broader trends in health and employment by education and sex. We document a growing proportion of claimants in any age group with mental and behavioral disorders as their principal health condition. We also show the decline in the number of older working age men receiving disability benefits to have been partially offset by growth in the number of younger women receiving these benefits. We speculate on the impact of disability reforms on employment.

Few Social Security Disability Insurance (DI) beneficiaries return to the labor force, making it hard to assess their likely employment in the absence of benefits. Using administrative data, I examine the employment of individuals who lost DI eligibility after the 1996 removal of drug and alcohol addictions as qualifying conditions. Approximately 22 percent started working at levels that would have disqualified them for DI, an employment response that is large relative to their work histories. Those who received DI for 2-3 years had the largest response, suggesting that a period of public assistance may maximize the employment of some disabled individuals.