The Age Pension Means Tests: Contorting Australian Retirement

Most Australian retirees are likely to be subject to the Age Pension assets or income test at some point. Evidence is that many retirees adapt their consumption to increase Age Pension entitlements, but long-term implications are difficult to determine—even if the current rules were to remain in place. This chapter evaluates the current approach to means testing against the principles set out in a Department of Social Services discussion paper on this topic. We evaluate the implied “effective marginal tax rates” (EMTRs) on the assets of part pensioners who are subject to the assets test. We find that depending on a variety of parameters such as assumed future earnings rates, demographic status, drawdown strategy and the base level of assets held, the EMTRs are high enough to explain material distortions to savings decisions of those still in employment, and the spending and investment decisions of retirees. Optimal decisions in this context require contorted retirement strategies that do not appear to be in anyone’s interest. Some possible remedies are suggested, which should include incorporating the value of the principal residence within the assets test. The chapter therefore illustrates the application of principled analysis to policy issues of this sort.

Addressing the Pension Decumulation Phase of Employee Retirement Planning

Longevity increases and population ageing create challenges for all societal institutions, particularly those providing retirement income, healthcare, and long-term care services. At the individual level, an obvious question is how to ensure all retirees have an adequate, secure, stable, and predictable lifelong income stream that will allow them to maintain a target standard of living for, however, long the individual lives. In this chapter, we review and discuss the main pension decumulation options by explicitly modelling consumers’ behaviour and objectives though an objective function based on utility theory accounting for consumption and bequest motives and different risk preferences. Using a Monte-Carlo simulation approach calibrated to US financial market and mortality data, our results suggest that purchasing a capped participating longevity-linked life annuity at retirement including embedded longevity and financial options that allow the annuity provider to periodically revise annuity payments if observed survivorship and portfolio outcomes deviate from expected (or guaranteed) values at contract initiation deliver superior welfare results when compared with classical annuitization and non-annuitization decumulation strategies.

Pathways to Retirement in Taiwan: Do Ethnicity and Cohort Matter?

Studies about retirement often neglect ethnic identity. This research utilized the “Taiwan Longitudinal Study in Aging” data from 1989 to 1996 when political and social changes in the country occurred to examine the influence of ethnicity (dominant Mainlanders versus Southern Min, Hakka, and various indigenous people) on Taiwanese men’s working status at age 60 and above. We asked three questions: (1) Are Mainlanders more likely to retire earlier than non-Mainlanders? (2) Does working in the public versus the private sector affect the age of retirement and does this differ by ethnicity? (3)What factors determine retirement ages of two cohorts? Using chi-square and t-tests, results of a comparison of two cohorts (n = 1254 and n = 526 for the 1989 and 1996 cohorts, respectively) showed that being a Mainlander, being unmarried, older age, self-reported poor health, and functional limitation were associated with a higher likelihood of earlier retirement. In logistic regression models, public sector work mediated and moderated the effect of ethnicity on the likelihood of earlier retirement only in the older cohort, where Mainlander public sector workers had the greatest likelihood of earlier retirement, indicating that the incentive structure of public pensions contributes to earlier retirement. The results are consistent with cumulative advantage theory. To delay the retirement age for public sector workers, policymakers could reduce public pension incentives.

Alternatives to Serve the Interests of Russian Pensioners

The results of the analysis of statistical data on the Russian labor market, employment and wages, as well as the specific features of the Russian pension system, provide the basis for several important conclusions. Firstly, the living standards of the majority of Russian pensioners do not meet their needs as the Russian pension system is focused on the achievement of minimum living standards. Secondly, the regulation on the functioning of the pension system established by Russian legislation is often violated by the regulators without coordination with economic entities and citizens, participants of the pension system, which prevents future pensioners from feeling protected upon retirement. For this reason, citizens of the retirement age do not seek to retire even when they reach the retirement age. The growth rate of working pensioners (who pay taxes, including insurance deductions to the Pension Fund of Russia and private pension funds) confirms this. Thirdly, there is a need to create a socially-comfortable environment for pensioners, to counteract the psychological problems of older people their sense of “uselessness” to society. The article proposes practical measures to mitigate the negative phenomena in the pension provision of Russian citizens.

Called to Plan: Changing Patterns and Perceptions of Retirement for Australian and New Zealand Faith-Based Ministers

The rising tide of aging citizens globally suggests a compelling argument for increasing understanding of factors impacting retirement. Factors such as health and finance have been identified as principal, but these results generally apply to homogenous groups with little reference to the impact of culture and tradition. This study adopted an ex post-facto, cross-sectional, self-reporting survey from working faith-based ministers in Australia and New Zealand to ascertain personal and professional factors affecting retirement perception in specific context including results for age-related differences. Results from four areas of foci show participants generally regarded retirement as a positive season. They were, however, less confident about their preparedness and mostly dissatisfied with the level of planning for retirement. Significant differences were noted in age-related groups with health and financial considerations constituting the primary differences. Increased understanding of changing patterns and perceptions for specific groups including age differences, potentially aids the response of state and society to the ageing phenomenon.

Retired but Not Tired: Entrepreneurial Motives and Performance among Retired Public Servants in Tanzania

Venturing into a business venture at an old age is an interesting phenomenon. Retirees seem to consider this decision as imperative as it provides them with a source of earning and keeps them active post-retirement. Despite a plethora of research on entrepreneurship, there is a paucity of research on entrepreneurial behavior and performance retired public servants. The current study examines the motive and performance of businesses owned by retired public servants in Tanzania, one of the developing economies. The study used a survey of 90 randomly selected public servants who retired between 2012 and 2016. The descriptive and probit regression analyses were used to examine the entrepreneurial performance and factors associated with it. The results of the analysis suggest that the performance of the businesses is generally not good, as the majority made losses for the past 3 years consecutively. As for the determinants of performance, the study observed that age and source of capital negatively affect performance, whereas education and planning/preparations for business establishment positively influenced entrepreneurial performance. The findings imply that employees, employers and social security industry have a role to play in creating awareness and preparing public service employees for life after retirement especially in sustaining post-retirement income. Lumpsum pension and monthly allowance may be necessary, but the knowledge to manage them through profitable business ventures my be sufficient for a better post-retirement life.

Lifestyles, Health, and Life Satisfaction among the Portuguese Seniors

This chapter focuses on the interaction between lifestyles, health, and life satisfaction of Portuguese seniors. The aim of the analysis is to find the main determinants of health and life satisfaction and to verify the importance of lifestyle variables as determinants of health and life satisfaction. We used data collected by the National Health Survey of 2014 and estimated two ordered probits. The main results show that not all lifestyle variables are meaningful in explaining self-assessed health and life satisfaction. The determinants of the health status include education and income; however, it can be assumed that overall good health, family, or close people and income contribute to life satisfaction. A general profile of the Portuguese seniors is provided; however, the results obtained here are changing as a new scenario is emerging, generation X enters old age.

The End of the Retirement “Age”: How the New World of Work Is Transforming the Old World of Retirement

The nature of work is undergoing fundamental transformation in the twenty-first century with drivers including digitalization, automation, and new forms of work organization. This chapter explores how the concept of retirement itself is increasingly redundant in relation to the new world of work. Of course, working lives inevitably do come to an end, but for whom, and at what point, and under what personal and social financial conditions, is this end point? Many people will want, and be required by public policy, to continue their working lives well into later life. In addition, the new dynamics of work and employment unfolding may enable this later life engagement. But in the “post-work” world predicted by many scholars, will later life employment be a possibility for them, and even for many people in their middle and younger years? This chapter explores the implications of the future of work for how traditional models of working lives and retirement need to be restructured and examines the one vital reform to ensure everyone can sustain a decent life in the new highly volatile world of work.