Personal Pension Plans and Stock Market Volatility PDF Download
Are you looking for read ebook online? Search for your book and save it on your Kindle device, PC, phones or tablets. Download Personal Pension Plans and Stock Market Volatility PDF full book. Access full book title Personal Pension Plans and Stock Market Volatility by Max Alier. Download full books in PDF and EPUB format.
Author: Max Alier
Publisher: World Bank Publications
ISBN:
Category : America Latina - Seguridad social
Languages : en
Pages : 58
Get Book Here
Book Description
Personal pension plans transfer investment risk to participating workers and expose them to the volatility of financial returns. Simple financial strategies lower the volatility of replacement rates but at a significant cost in terms of lower replacement rates. The purchase of valuable annuities reduces the dispersion of replacement rates across generations without lowering their level.
Author: Max Alier
Publisher: World Bank Publications
ISBN:
Category : America Latina - Seguridad social
Languages : en
Pages : 58
Get Book Here
Book Description
Personal pension plans transfer investment risk to participating workers and expose them to the volatility of financial returns. Simple financial strategies lower the volatility of replacement rates but at a significant cost in terms of lower replacement rates. The purchase of valuable annuities reduces the dispersion of replacement rates across generations without lowering their level.
Author: Richard Hinz
Publisher: World Bank Publications
ISBN: 0821381601
Category : Business & Economics
Languages : en
Pages : 300
Get Book Here
Book Description
Countries around the world are increasingly relying on individual pension savings accounts to provide income in old age for their citizens. Although these funds have now been in place for several decades, their performance is usually measured using methods that are not meaningful in relation to this long-term objective. The recent global financial crisis has highlighted the need to develop better performance evaluation methods that are consistent with the retirement income objective of pension funds. Compiling research derived from a partnership among the World Bank, the Organisation for Economic Co-operation and Development (OECD), and three private partners, 'Evaluating the Financial Performance of Pension Funds' discusses the theoretical basis and key implementation issues related to the design of performance benchmarks based on life-cycle savings and investment principles. The book begins with an evaluation of the financial performance of funded pension systems using the standard mean variance framework. It then provides a discussion of the limitations inherent to applying these methods to pension funds and outlines the many other issues that should be addressed in developing more useful and meaningful performance measures through the formulation of pension-specific benchmark portfolios. Practical implementation issues are addressed through empirical examples of how such benchmarks could be developed. The book concludes with commentary and observations from several noted pension experts about the need for a new approach to performance measurement and the impact of the recent global financial crisis on pension funds.
Author: John Y. Campbell
Publisher: OUP Oxford
ISBN: 019160691X
Category : Business & Economics
Languages : en
Pages : 272
Get Book Here
Book Description
Academic finance has had a remarkable impact on many financial services. Yet long-term investors have received curiously little guidance from academic financial economists. Mean-variance analysis, developed almost fifty years ago, has provided a basic paradigm for portfolio choice. This approach usefully emphasizes the ability of diversification to reduce risk, but it ignores several critically important factors. Most notably, the analysis is static; it assumes that investors care only about risks to wealth one period ahead. However, many investors—-both individuals and institutions such as charitable foundations or universities—-seek to finance a stream of consumption over a long lifetime. In addition, mean-variance analysis treats financial wealth in isolation from income. Long-term investors typically receive a stream of income and use it, along with financial wealth, to support their consumption. At the theoretical level, it is well understood that the solution to a long-term portfolio choice problem can be very different from the solution to a short-term problem. Long-term investors care about intertemporal shocks to investment opportunities and labor income as well as shocks to wealth itself, and they may use financial assets to hedge their intertemporal risks. This should be important in practice because there is a great deal of empirical evidence that investment opportunities—-both interest rates and risk premia on bonds and stocks—-vary through time. Yet this insight has had little influence on investment practice because it is hard to solve for optimal portfolios in intertemporal models. This book seeks to develop the intertemporal approach into an empirical paradigm that can compete with the standard mean-variance analysis. The book shows that long-term inflation-indexed bonds are the riskless asset for long-term investors, it explains the conditions under which stocks are safer assets for long-term than for short-term investors, and it shows how labor income influences portfolio choice. These results shed new light on the rules of thumb used by financial planners. The book explains recent advances in both analytical and numerical methods, and shows how they can be used to understand the portfolio choice problems of long-term investors.
Author: Sudhir Rajkumar
Publisher: World Bank Publications
ISBN: 0821384708
Category : Social Science
Languages : en
Pages : 364
Get Book Here
Book Description
And key messages -- Key principles of governance and investment management -- Governance of public pension assets -- Governance structures and accountabilities -- Qualification, selection, and operation of governing bodies -- Operational policies and procedures -- Managing fiscal pressures in defined-benefit schemes -- Policy responses to turbulent financial markets -- Investment of public pension assets -- Defining the investment policy framework for public pension funds -- Managing risk for different cohorts in defined-contribution schemes -- An asset-liability approach to strategic asset allocation for pension funds -- In-house investment versus outsourcing to external investment managers -- International investments and managing the resulting currency risk -- Alternative asset classes and new investment themes.
Author: National Research Council
Publisher: National Academies Press
ISBN: 0309261961
Category : Social Science
Languages : en
Pages : 230
Get Book Here
Book Description
The United States is in the midst of a major demographic shift. In the coming decades, people aged 65 and over will make up an increasingly large percentage of the population: The ratio of people aged 65+ to people aged 20-64 will rise by 80%. This shift is happening for two reasons: people are living longer, and many couples are choosing to have fewer children and to have those children somewhat later in life. The resulting demographic shift will present the nation with economic challenges, both to absorb the costs and to leverage the benefits of an aging population. Aging and the Macroeconomy: Long-Term Implications of an Older Population presents the fundamental factors driving the aging of the U.S. population, as well as its societal implications and likely long-term macroeconomic effects in a global context. The report finds that, while population aging does not pose an insurmountable challenge to the nation, it is imperative that sensible policies are implemented soon to allow companies and households to respond. It offers four practical approaches for preparing resources to support the future consumption of households and for adapting to the new economic landscape.
Author: Samuel Pienknagura
Publisher: International Monetary Fund
ISBN: 151359611X
Category : Business & Economics
Languages : en
Pages : 52
Get Book Here
Book Description
Chile’s pension system came under close scrutiny in recent years. This paper takes stock of the adequacy of the system and highlights its challenges. Chile’s defined contribution system was quite influential when introduced, and was taken as an example by other countries. However, it is now delivering low replacement rates relative to OECD peers, as its parameters did not adapt over time to changing demographics and global returns, while informality persists in the labor market. In the absence of reforms, the system’s inability to deliver adequate outcomes for a large share of participants will continue to magnify, as demographic trends and low global interest rates will continue to reduce replacement rates. In addition, recent legislation allowing for pension savings withdrawals to counter the effects from the COVID-19 pandemic, is projected to further reduce replacement rates and increase fiscal costs. A substantial improvement in replacement rates is feasible, via a reform that raises contribution rates and the retirement age, coupled with policies that increases workers’ contribution density.
Author: Jun Peng
Publisher: CRC Press
ISBN: 0849305519
Category : Political Science
Languages : en
Pages : 286
Get Book Here
Book Description
Intense media coverage of the public pension funding crisis continues to fuel heightened awareness in and debate over public pension benefits. With over $3 trillion in assets currently under management, the ramifications of poor oversight are severe. It is important that practitioners, researchers, and taxpayers be well-advised regarding any concer
Author: Dimitri Vittas
Publisher: World Bank Publications
ISBN:
Category : Capital market
Languages : en
Pages : 30
Get Book Here
Book Description
Private pension funds are neither necessary nor sufficient for capital market development. But if they are subject to conducive regulations, adopt optimizing policies, and operate in a pluralistic structure, they can have a large impact on capital market modernization and development once they reach a critical mass.
Author: Dimitri Vittas
Publisher:
ISBN:
Category :
Languages : en
Pages : 52
Get Book Here
Book Description
Personal pension plans transfer investment risk to participating workers and expose them to the volatility of financial returns. Simple financial strategies lower the volatility of replacement rates but at a significant cost in terms of lower replacement rates. The purchase of variable annuities reduces the dispersion of replacement rates across generations without lowering their level.One of the strongest objections to personal pension plans is that they transfer investment risk to individual workers, who are then exposed to the vagaries of equity and bond markets. Using historical U.S. data, Alier and Vittas investigate the impact of the volatility of investment returns on replacement rates in the context of personal pension plans.They find large fluctuations in replacement rates across different cohorts of workers, if undiversified portfolios are used.They then explore a number of simple financial strategies for coping with this problem, including:- Portfolio diversification.- A late, gradual shift to bonds.- A gradual purchase of nominal or real annuities.- A purchase of variable annuities.The first three strategies lower the volatility of replacement rates, but at a significant cost in terms of lower replacement rates. The purchase of variable annuities reduces the dispersion of replacement rates across generations without lowering their level - because of the persistence of the equity premium and the fact that the volatility of equity returns is lower, the longer the holding period.Sophisticated financial engineering promises more efficient solutions to this problem, but it may not be feasible to apply it in developing countries (or in developing financial markets). Neither Alier and Vittas's approach nor the more sophisticated financial engineering solutions would be able to deal effectively with persistent deviations of investment returns from long trends. But the authors' findings suggest that overconcern about the impact on replacement rates of short-term volatility in stock markets may not be warranted.This paper - a product of Finance, Development Research Group - is part of a larger effort in the group to study pension systems and the impact of pension reform. The authors may be contacted at
[email protected] or
[email protected].
Author: Francesco Menoncin
Publisher: Springer Nature
ISBN: 3030555283
Category : Business & Economics
Languages : en
Pages : 245
Get Book Here
Book Description
This book presents a consistent and complete framework for studying the risk management of a pension fund. It gives the reader the opportunity to understand, replicate and widen the analysis. To this aim, the book provides all the tools for computing the optimal asset allocation in a dynamic framework where the financial horizon is stochastic (longevity risk) and the investor's wealth is not self-financed. This tutorial enables the reader to replicate all the results presented. The R codes are provided alongside the presentation of the theoretical framework. The book explains and discusses the problem of hedging longevity risk even in an incomplete market, though strong theoretical results about an incomplete framework are still lacking and the problem is still being discussed in most recent literature.
