Annuity pricing in public pension plans: importance of interest rates

2019 ◽  
Vol 20 (1) ◽  
pp. 27-48
Author(s):  
Nino Abashidze ◽  
Robert L. Clark ◽  
Robert G. Hammond ◽  
Beth M. Ritter ◽  
David Vanderweide
Keyword(s):  
Local Government ◽  
Interest Rates ◽  
Mortality Rates ◽  
Pension Plans ◽  
General State ◽  
Retirement Plans ◽  
Government Employees ◽  
Public Pension Plans ◽  
State Employees ◽  
The Impact

AbstractThis study examines the distribution options of 85 large public retirement plans covering general state employees, teachers, and local government employees. The interest rates used to price annuities vary considerably across the plans. As a result, retirees with the same monthly benefit if a single life benefit is chosen will have substantially different monthly benefits if they select a joint and survivor annuity. We examine the impact of variation in the pricing of annuity options using both cross-plan differences in interest rates and the change in the choice of annuity options in one plan after the price of options changes due to new assumed interest rates and mortality rates.

Determinants of the generosity of pension plans for public school teachers, 1982–2006

2010 ◽  
Vol 10 (1) ◽  
pp. 99-118 ◽  
Author(s):  
ROBERT L. CLARK ◽  
LEE A. CRAIG
Keyword(s):  
Public School ◽  
School Teacher ◽  
Pension Plan ◽  
The United States ◽  
Pension Plans ◽  
Retirement Plans ◽  
Teacher Retirement ◽  
History Of ◽  
State Employees ◽  
The Impact

AbstractAll states provide pension plans to their teachers and civil servants; however, these plans vary across the states. We present a history of the development of teacher retirement plans during the twentieth century, describe how teacher plans relate to retirement plans for other state employees, and assess the impact of teachers not being included in Social Security on the benefits they receive from their employer pension plan. Over the past 25 years, public school teacher retirement plans in the United States have increased in generosity as benefit formulas have been increased, salary averaging periods have been reduced, and the normal retirement age has been lowered. We employ data from retirement plans in the states to estimate the impact of social and economic factors on the replacement rates for teachers retiring with 30 years of service.

scholarly journals Red tape and psychological capital: a counterbalancing act for professionals in street-level bureaucracies

2020 ◽  
Author(s):  
A Dudau ◽  
G Kominis ◽  
Y Brunetto
Keyword(s):  
Local Government ◽  
Organizational Behavior ◽  
Psychological Capital ◽  
Negative Impact ◽  
Practical Implication ◽  
Well Being ◽  
Government Employees ◽  
Street Level ◽  
Red Tape ◽  
The Impact

Abstract Assuming that red tape is inevitable in institutions, and drawing on positive organizational behavior, we compare the impact of individual psychological capital on the ability of street-level bureaucrats (SLBs) with different professional backgrounds to work within the confines of red tape. The two SLB professions investigated here are nurses and local government employees; and the work outcomes of interest to this study are well-being and engagement. The findings show that red tape has a different impact on each professional group but, encouragingly, they also indicate that psychological capital has a compensatory effect. Implications include nurses requiring more psychological resources than local government employees to counteract the negative impact of red tape. A practical implication for managers is that, if perception of red tape in organizations is set to increase or to stay constant, enhancing the psychological capital of professionals in SLB roles, through specific interventions, may be beneficial to professionals and organizations alike.

scholarly journals Annuity Pricing in Public Pension Plans: Importance of Interest Rates

2018 ◽  
Author(s):  
Nino Abashidze ◽  
Robert Clark ◽  
Beth Ritter ◽  
David Vanderweide
Keyword(s):  
Interest Rates ◽  
Pension Plans ◽  
Public Pension ◽  
Public Pension Plans

scholarly journals Worker Choices About Payouts in Public Pensions

2017 ◽  
Author(s):  
Robert L. Clark ◽  
Janet Raye Cowell
Keyword(s):  
Local Governments ◽  
Pension Plans ◽  
Policy Implications ◽  
Empirical Literature ◽  
Defined Benefit ◽  
Retirement Plans ◽  
The Public ◽  
State And Local ◽  
State Employees ◽  
State Pension

This chapter reviews available data on the annuity choices offered to retirees who participate in defined benefit (DB) plans. DB plans are most commonly offered by state and local governments to their employees, and information on annuity options is readily available. The authors examine all state pension plans that cover general state employees and teachers, and develop a table showing the similarities and differences across these approximately eighty separate state retirement plans. The authors determine the proportion of retirees selecting each of the annuity options. Where possible, annuity options in the public sector are compared to those offered by private sector employers. The chapter also reviews the empirical literature on who chooses the various annuity options offered in DB plans. Finally, the authors consider the policy implications of plan design and how this affects the types of annuities offered to retirees.

The Impact of State Pensions on Public Service Superannuation Schemes

1965 ◽  
Vol 91 (2) ◽  
pp. 147-195 ◽  
Author(s):  
A. C. Robb
Keyword(s):  
Local Government ◽  
National Health ◽  
Public Service ◽  
Armed Forces ◽  
Civil Servants ◽  
Government Employees ◽  
Common Pattern ◽  
Stage Of Development ◽  
The Impact

In an earlier paper the author traced the development to 1949 of public service superannuation schemes (other than for the Armed Forces) which are provided wholly or partly out of Exchequer or rate funds, i.e. for the benefit of civil servants, teachers, national health and local government employees, police and firemen. It was shown that those schemes, other than for (principally) police and firemen, tended to follow a common pattern although not all had reached the same stage of development and there were numerous variations of detail.

The Public Debt of French Local Government

1985 ◽  
Vol 5 (3) ◽  
pp. 387-399 ◽  
Author(s):  
Pierre-Henri Derycke ◽  
Guy Gilbert
Keyword(s):  
Local Government ◽  
Interest Rates ◽  
Public Debt ◽  
Local Governments ◽  
Central Government ◽  
Tight Control ◽  
The Public ◽  
Policy Measures ◽  
The Impact

ABSTRACTAfter a sharp increase, the public debt of French local communities has been stabilized in real terms: its amount reached 54 per cent of total public debt in 1980. In the French institutional framework, local government borrowing policy is under the tight control of central agencies. An econometric model of the borrowing behaviour of local governments since 1965 is presented; it emphasizes the role of internal determinants of local debt (needs for investment, self-financing ability of governments), external constraints (e.g. interest rates and the financial resources of lenders, such as households savings), and finally the impact of macroeconomic policy measures from the central government.

Sustainability of Local Government Sector Debt. Evidence from Monte-Carlo Simulations

2016 ◽  
Vol 14 (1) ◽  
pp. 115-132 ◽  
Author(s):  
Krzysztof Kluza
Keyword(s):  
Monte Carlo ◽  
Interest Rate ◽  
Local Government ◽  
Interest Rates ◽  
Local Governments ◽  
The European Union ◽  
Investment Policies ◽  
Government Sector ◽  
Systemic Problems ◽  
The Impact

The financial standing of local governments across the European Union was strongly affected by the economic crisis. The local government sector conducted vast investment policies reaching 10.2% of all investments in the EU countries in 2010. However, at the same time its indebtedness expanded significantly. The current low interest rate environment makes the sector vulnerable to future interest rate increases. The presented research analyses the impact of several scenarios of interest rate changes in Poland on the local governments’ ability to service their current debt burdens. Simulations are conducted with the Monte Carlo method. Some scenarios indicate a high vulnerability of local governments to adverse changes in market interest rates, but only if they are combined with a reduction of sector’s operating surplus. Such an economic setup may give rise to systemic problems for the whole public sector.

scholarly journals Public Sector ‘Modernisation’: Examining the Impact of a Change Agenda on Local Government Employees in England

2018 ◽  
Vol 77 (2) ◽  
pp. 203-221 ◽  
Author(s):  
Russ Glennon ◽  
Ian Hodgkinson ◽  
Joanne Knowles ◽  
Zoe Radnor ◽  
Nicola Bateman
Keyword(s):  
Public Sector ◽  
Local Government ◽  
Government Employees ◽  
The Impact

scholarly journals State and Local Government Pension Funding on the Eve of the COVID-19 Recession

2020 ◽  
Vol 53 (1) ◽  
pp. 16-23
Author(s):  
John G. Kilgour
Keyword(s):  
Accounting Standards ◽  
Pension Plans ◽  
Public Pension ◽  
Asset Valuation ◽  
Governmental Accounting ◽  
The Public ◽  
State And Local Government ◽  
State And Local ◽  
Public Pension Plans ◽  
The Impact

This article examines the funding of public pension plans through 2019. Particular attention is paid to the impact of the Governmental Accounting Standards Board’s Standard No. 68. It addressed (1) discount rates, (2) amortization periods, (3) asset valuation and smoothing, and (4) the actuarial cost method used. The combined effect of these measures has been to increase the amount of public pension underfunding significantly. The actuarial funded ratio of the 126 plans in the Public Plans Database went from 101.9 in 2001 to 71.9 in 2019, on the eve of the COVID-19 recession. It will no doubt continue to worsen in the years ahead. The extent of that likely worsening is also explored.

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