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This paper investigates a stochastic model of a continuous-time target benefit pension system with habit formation, where members' contributions are predetermined and pension payments depend on the financial condition of the system. Moreover, risk sharing among different generations is considered and we incorporate the habitual benefit payment process into the plan manager's objective. Concretely, the plan manager aims to minimize the deviation between actual payments and habitual payments, which can minimize the combined benefit-risk (i.e. deviation from the habitual target) and intergenerational transfers effectively. Furthermore, the pension fund is allowed to invest in a risk-free asset and a risky asset. By employing the martingale method, we derive the optimal investment strategy and the benefit adjustment strategy explicitly. Finally, numerical analysis is provided to illustrate the effects of model parameters on the optimal strategies. [ABSTRACT FROM AUTHOR]

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Abstract In this research, we delve into the realm of pension plan programs, essential for securing a robust livelihood post-retirement through the provision of pension benefits to retired employees. Addressing the intricate balance between financial sustainability and risk mitigation, companies are mandated to allocate funds for pension benefits. The hybrid pension plan, a novel amalgamation of defined-benefit (DB) and defined-contribution (DC) features, emerges as a strategic solution to minimize the inherent risks of both models. This study undertakes the task of calculating the costs associated with pension benefits and the replacement ratio (RR) for both the traditional DB plan and the innovative hybrid pension plan. Drawing on data from 90 employees at Company X, we assume an effective interest rate of 4% for the DB plan and explore various scenarios for the hybrid plan, ranging from 3% to 5%. The findings present a compelling narrative: the costs required to fund the hybrid plan are found to be notably lower than those for the DB plan, ushering in a more economically sustainable approach. Concurrently, the RR derived from the hybrid plan surpasses that of the DB plan, showcasing its potential to provide a more substantial post-retirement income. Additionally, as the effective interest rate escalates, costs rise, and RR declines, emphasizing the sensitivity of these parameters to the interest rate. Considering these results, a conclusion emerges: the hybrid pension plan stands out as the optimal choice for employees at Company X, presenting a novel and advantageous approach to pension program design and implementation. Keywords: Cost of pension benefits; Defined-benefit; Hybrid; Pension plan; Replacement ratio. Abstrak Dalam penelitian ini, kami mendalami program pensiun, yang penting untuk menjamin penghidupan yang kuat setelah pensiun melalui pemberian manfaat pensiun kepada karyawan yang pensiun. Untuk mengatasi keseimbangan rumit antara keberlanjutan finansial dan mitigasi risiko, perusahaan diwajibkan mengalokasikan dana untuk manfaat pensiun. Program pensiun hybrid, yang merupakan penggabungan fitur manfaat pasti (DB) dan iuran pasti (DC), muncul sebagai solusi strategis untuk meminimalkan risiko yang melekat pada kedua model tersebut. Studi ini menghitung biaya yang terkait dengan manfaat pensiun dan replacement ratio (RR) untuk program DB dan program pensiun hybrid. Berdasarkan data dari 90 karyawan di Perusahaan X, kami mengasumsikan tingkat bunga efektif sebesar 4% untuk program DB dan menggunakan rentang 3% hingga 5% untuk program hybrid. Hasil penelitian menemukan bahwa biaya yang diperlukan untuk mendanai program hybrid ternyata jauh lebih rendah dibandingkan dengan program DB, sehingga menghasilkan pendekatan yang lebih berkelanjutan secara ekonomi. Pada saat yang sama, RR yang diperoleh dari program hybrid melampaui program DB, sehingga menunjukkan potensinya dalam memberikan pendapatan pasca-pensiun yang lebih besar. Selain itu, ketika tingkat bunga efektif meningkat, biaya meningkat, dan RR menurun. Hal ini menekankan sensitivitas parameter-parameter ini terhadap tingkat bunga efektif. Kesimpulannya program pensiun hybrid merupakan pilihan optimal bagi karyawan di Perusahaan X, karena menghadirkan pendekatan baru dan menguntungkan dalam perancangan dan implementasi program pensiun. Kata Kunci: Biaya manfaat pensiun; Dana pensiun; Defined-benefit; Hybrid; Replacement ratio. 2020MSC: 62P05.

The focus of this article is to quantitatively evaluate and compare three of the most popular defined benefit plan types based on various variable assumptions. The decision of when to retire and take a pension, or being given the option to change plans, often happens only once. This makes the evaluation and comparison critical. This paper provides a numerical analysis with a broad perspective so that employees with varying career situations and retirement plans can better evaluate their financial standing. Data sources include standard economic assumptions used in valuing pension plans, as well as a survey of employer sponsored pension plans. Recent pension plans provide more flexibility by paying out pensions as a single lump sum, however, these plans generally provide lower benefits. [ABSTRACT FROM AUTHOR]

Purpose – The purpose of this study is to identify arrangements of fully funded defined contribution (FF-DC) pension plans associated with the continuity of retirement savings. Design/methodology/approach – The authors adopted an experimental design composed of a control group and two treatment groups. In all groups, individuals made decisions throughout nine periods: five during the working period and four at the postretirement stage. The authors asked participants if they wanted to join a pension plan, and which plan. The authors offered three plans with different risk profiles: plan 1 (high risk), plan 2 (moderate) and plan 3 (low risk) and one risk-free plan, plan 4. In treatment groups 1 and 2, there was an automatic enrollment of the participants in the default plan (moderate risk), and in the following periods they had to decide whether to continue contributing, and in this case, to which plan, with a defined percentage. Findings – In treatment scenarios, participants chose the riskiest plan in all periods of the experiment, and most of them chose the risk-free plan in period 5. These findings suggest that pension plans with automatic enrollment, employer matching and low risk foster the continuation of retirement savings. Research limitations/implications – The research has as limitation the fact that the sample is not representative of the population and therefore does not allow generalizations. This is because the authors use social media ads to prospect respondents. Practical implications – The research's findings can be relevant for the design of public policies for private pension plans, suggesting that compulsory automatic enrollment can be used as default in plans offered by the employers. The results encourage the inclusion of behavioral elements in the design of the pension system, paying attention to the nudges. In this sense, it is possible to increase participation in the pension plan and develop low cost programs to increase the amount accumulated by people before retirement. Social implications – Decision-making architecture, such as automatic enrollment, can improve individuals' retirement decisions, affecting savings and welfare in the long run. Originality/value – Although the effect of pension plan designs is widely studied in other countries, such as the United States and United Kingdom, the authors are unaware of a national empirical research that seeks to understand how different arrangements affect an individual choice through an experiment.

In this article, the performance of the various mandatory pension funds is analyzed. The impact of differences in contribution and benefit calculation rules on the performance of all the pension schemes is examined. The impact of parametric reform for the CMR’s civilian regime is also analyzed. This analysis is based on simulating the application of the current calculation parameters to a typical case and interpreting the results obtained from the return indicators calculated on the basis of the simulated contributions and benefits of the test case. The indicators analyzed are the recovery time and rate, the internal rate of return and the different types of replacement rate.The interpretation of the results obtained from the indicators concludes that the differences in pension fund returns are due to differences in the parameters for calculating contributions and benefits. In addition, the parametric reform of the CMR’s civilian regime will have a positive impact on the pension scheme performance but in return, a negative impact on the replacement rates of members’ wages which is considered a withdrawal of their social rights. This situation imposes the reform of the retirement system and discusses the various possible options

This study aims to review the practice of accounting application of pension programs in entities without public accountability. This research uses the object of pension program implemented by Waroeng SS. The research method used in this study using qualitative methods. The study was conducted during the period of March-June 2018. Interviews to informant was conducted on the second week of May 2018. The selection of informant was based on the knowledge capabilities associated with the information in this study. The informant in this research is the financial staff of Waroeng SS. This study concludes that the retirement / pension benefit accounting policy in Waroeng SS is implemented through a defined benefit plan that is independently managed by the internal Waroeng SS or can be referred to by the employer's pension fund. There are differences in the recording of liabilities on pension plans implemented by Waroeng SS and SAK ETAP Chapter 23 (2009). Furthermore, the pension fund managed by Waroeng SS which is still one with the management of the SS waroeng is contrary to regulations concerning pension funds, but does not conflict with SAK ETAP because SAK ETAP does not regulate related to the separation of funds between management and pension funds

Purpose - The purpose of this study is to identify arrangements of fully funded defined contribution (FF-DC) pension plans associated with the continuity of retirement savings. Design/methodology/approach - The authors adopted an experimental design composed of a control group and two treatment groups. In all groups, individuals made decisions throughout nine periods: five during the working period and four at the postretirement stage. The authors asked participants if they wanted to join a pension plan, and which plan. The authors offered three plans with different risk profiles: plan 1 (high risk), plan 2 (moderate) and plan 3 (low risk) and one risk-free plan, plan 4. In treatment groups 1 and 2, there was an automatic enrollment of the participants in the default plan (moderate risk), and in the following periods they had to decide whether to continue contributing, and in this case, to which plan, with a defined percentage. Findings - In treatment scenarios, participants chose the riskiest plan in all periods of the experiment, and most of them chose the risk-free plan in period 5. These findings suggest that pension plans with automatic enrollment, employer matching and low risk foster the continuation of retirement savings. Research limitations/implications - The research has as limitation the fact that the sample is not representative of the population and therefore does not allow generalizations. This is because the authors use social media ads to prospect respondents. Practical implications - The research's findings can be relevant for the design of public policies for private pension plans, suggesting that compulsory automatic enrollment can be used as default in plans offered by the employers. The results encourage the inclusion of behavioral elements in the design of the pension system, paying attention to the nudges. In this sense, it is possible to increase participation in the pension plan and develop low cost programs to increase the amount accumulated by people before retirement. Social implications - Decision-making architecture, such as automatic enrollment, can improve individuals' retirement decisions, affecting savings and welfare in the long run. Originality/value - Although the effect of pension plan designs is widely studied in other countries, such as the United States and United Kingdom, the authors are unaware of a national empirical research that seeks to understand how different arrangements affect an individual choice through an experiment. [ABSTRACT FROM AUTHOR]

The millennial population (also called as Gen Y) is completely different from any other generation - be it their sociological and demographic profile or their involvement in the financial ecosystem. India boasts of 440 million millennials who comprise 34% of population and 46% of the work force. Innovatively designed pension schemes that are specifically targeted at millennials are needed to encourage the latter to invest in pension schemes. While devising pension schemes, analyzing the behavioral patterns of millennial consumers will certainly help. The various pension schemes that are available in the market have been studied along with the efforts by the Indian Government to popularize pension schemes. The output of research studies conducted on millennials has been reviewed. Through an optimal mix of primary and secondary data, the study explores the attitudes that millennials have towards retirement in general and retirement products in particular. The results of the empirical study conducted as part of this research reveal certain important findings that will prove to be useful to pension service providers. The research makes recommendations that will enable pension providers to introduce pension products that are aligned with the needs and expectations of millennials. There is a need for greater transparency and better governance of pension schemes to improve the credibility of these schemes. Awareness about pension products through digital media will prove to be effective. Organisations should use a "market pull" approach to motivate millennials to invest in pension schemes. [ABSTRACT FROM AUTHOR]