Mental Time Travel and Retirement Savings

We portray the valuation of retirement savings in terms of a mental time travel journey in which a proposed contribution to a pension plan is projected forward to the plan member’s retirement date and this projected value is then discounted back to today, thereby giving a present or personal value. We set this within a broader framework of pension planning, which seeks to smooth consumption over the lifecycle. We explain how two psychological biases—exponential growth bias and present bias—can lead to a difference between the initial value of a pension contribution and its present value, such a difference reflecting an asymmetry between projection and discounting, and how such a difference might lead to inadequate retirement savings and hence to a lower than desired standard of living in retirement. We consider how the two biases might be mitigated.

What matters for pension planning in Turkey: financial literacy or perceived consumer risks?

PurposeThis study mainly aimed to show that financial literacy is not always enough in explaining workers' individual pension plan ownership as financial literacy knowledge does not always result in financially literate decisions/actions, and in such cases perceived consumer risks can be used to explain the IPP ownership decision of workers.Design/methodology/approachThe data were collected via a questionnaire adapted from earlier questionnaires using convenience and snowball sampling methods with Internet based applications such as Facebook, Twitter, Instagram and WhatsApp. T-tests, ANOVA and Chi-Square tests were conducted to find out if there is a relation/interaction between individual pension plan (IPP) ownership and financial literacy, and perceived consumer risks (N = 651).FindingsIt is found out that financial literacy level does not have a statistically significant relation with individual pension system (IPS) involvement of workers in Turkey, but perceived consumer risks show differences based on IPP ownership.Originality/valueTo the best of authors’ knowledge, this study contributes to the literature being the first paper to study the relationship between financial literacy and workers' IPP ownership decisions in Turkey and it also shows that perceived consumer risks can be used for explaining workers' IPS involvement in cases where financial literacy knowledge does not translate into financially literate decisions.

Missing Participants and Beneficiaries From Private-Sector Pension Plans

This article examines the problem of missing and nonresponsive participants and beneficiaries from defined-benefit (DB) and especially defined-contribution (DC) pension plans, mainly in the private (for profit) sector of the United States. It focuses on the current search requirements of the three government agencies involved in finding missing participants and beneficiaries: the Pension Benefit Guaranty Corporation (PBGC), the Department of Labor (DOL) and its Employee Benefit Services Administration (EBSA), and the Internal Revenue Service (IRS). The article also reviews the efforts of the Social Security Administration (SSA) in this area. It then reviews proposed legislation, the Retirement Savings Lost and Found Act of 2020 (now S. 1730; RSLFA). The issue of missing participants and beneficiaries often becomes critical when an employer goes out of business or for some other reason stops sponsoring a pension plan. The missing participants are owed their earned retirement benefits. They, not the employer, own them.

From Retrenchment to Selective Social Policy Expansion: The Politics of Federal Cash Benefits in Canada

While much has been written about the politics of retrenchment, in a number of advanced industrial societies social policy expansion does occur today, which raises issues about how to study it in a post-retrenchment era. The present article explores the new politics of social policy expansion in Canada. Drawing on the work of Paul Pierson, we use an integrated framework that highlights the interaction of five factors: the availability of fiscal resources; the emergence of new social risks; the intensity and nature of partisan competition; the policy preferences of the main political parties; and the role of political institutions, especially federalism. Empirically, the article studies the politics of federal social policy expansion during the Harper (2006–2015) and Justin Trudeau (2015–) years, with a focus on three policy areas: child benefits (Universal Child Care Benefit and Canada Child Benefit), pensions (Old Age Security and Canada/Quebec Pension Plan) and Employment Insurance.

Optimal Investment Strategy for DC Pension Plan with Stochastic Income and Inflation Risk under the Ornstein–Uhlenbeck Model

This paper is concerned with the optimal investment strategy for a defined contribution (DC) pension plan. We assumed that the financial market consists of a risk-free asset and a risky asset, where the risky asset is subject to the Ornstein–Uhlenbeck (O-U) process, and stochastic income and inflation risk were also considered in the model. We firstly derived the Hamilton–Jacobi–Bellman (HJB) equation through the stochastic control method. Secondly, under the logarithmic utility function, the closed-form solution of optimal asset allocation was obtained by using the Legendre transform method. Finally, we give several numerical examples and a financial analysis.