This paper examines the hypothetical retirement behavior of defined contribution (DC) pension plan participants. Using a Monte Carlo simulation approach, we compare and discuss three retirement decision models: the two-thirds replacement ratio benchmark model, the optionvalue of continued work model and a newly-developed “one-year” retirement decision model. Unlike defined benefit (DB) pension ...

This paper examines the conditions under which members of a defined benefit pension plan might bear investment risk, and examines the tradeoffs between defined benefit and defined contribution pension plans under these conditions. Wages and asset returns are assumed to be stochastic, and individuals are assumed to have no access to other savings markets or markets where human capital risk can b...

Rising costs of public employee pension plans are a source of fiscal stress in many cities and states and have led to calls for reform. To assess the economic consequences of plan changes it is important to have reliable statistical models of employee retirement behavior. The authors estimate a structural model of teacher retirement using administrative panel data. A Stock-Wise option value mod...

Pension Plan Characteristics and Framing Effects in Employee Savings Behavior In this paper we document the importance of framing effects in the retirement savings decisions of college professors. Pensions in many post-secondary institutions are funded by a combination of an employer contribution and a mandatory employee contribution. Employees can also make tax-deferred contributions to a supp...

We present descriptive statistics on pension participation and types of pensions among married couples, using data from the 1996/2008 Panels of the Survey of Income and Program Participation and Social Security administrative records. Previous research has focused on pension coverage by marital status, but has not examined couples as a unit. Because couples usually share income, viewing them as...

This study examines various factors that potentially explain cross-sectional variations in UK firms’ managerial discretion to switch towards a market-based actuarial pension valuation method for pension funding and reporting purposes. Evidence is based on accounting, actuarial and share market data for an industry-matched pair sample of 62 UK firms. We find a significant relationship between th...

Three kinds of the insurance policies for the net premium calculation for married couples are considered. The net premium equation principle is used in all premium calculations. The particular quality of the additional pension assurance is the individual form of its undertaking and the limitation of annual (monthly) pension payments. Due to this fact the biggest interest to the individual insur...

The decision by firms to offer an occupational pension is investigated with a unique linked employer-employee dataset, supplemented with detailed actuarial calculations of the cost to the firms of offering occupational pensions and constructed tax gains from pension contributions versus cash wage, driven by lower tax on wages than on pensions. The tax gains which can be shared between employers...

This article describes the characteristics of the longest job held by new disabled-worker beneficiaries responding to questions in the 1982 New Beneficiary Survey, conducted by the Social Security Administration in October-December 1982. The characteristics include pension coverage, job duration, employer type, occupation, and industry. Many disabled workers (about half the men and two-fifths o...

This article empirically examines the relationship between the funding of defined benefit pension plans and corporate debt ratings. The evidence indicates that unfunded pension liabilities reduce debt ratings more than an equivalent amount of excess pension assets increase debt ratings. This asymmetric relationship is consistent with the view that unfunded pension liabilities are corporate liab...