The Pensions, Retirement and Ageing Seminar Series is jointly hosted by CEPAR and the School of Risk & Actuarial Studies at UNSW Sydney.
It takes place on a Monday (or Wednesday) from 12-1pm at UNSW Kensington Campus, in Quadrangle Building, Room 2063, and provides an excellent opportunity to network with pensions and superannuation experts from Australia and overseas. This is an interdisciplinary group with backgrounds in economics, actuarial studies, finance, psychology, law, accounting, demography, marketing, medicine and related fields. We invite attendance of participants from other universities as well as from industry and government who are interested in both theoretical and applied research on pensions, retirement and ageing.
We also welcome presenters who are early career academics or practitioners. Please contact Inka Eberhardt if you are interested in presenting or want to be added to the Pensions, Retirement and Ageing Seminar Series mailing list.
There is no charge to attend these seminars.
Term 1, 2020
24 Feb - Piet de Jong (Department of Applied Finance and Actuarial Studies, Macquarie University) "Lockboxes and Glide Paths"
11 March - Geoff Warren (ANU College of Business and Economics) "The ‘Right’ Level for the Superannuation Guarantee: A Straightforward Issue by No Means"
6 April - Arvid Hoffmann (Faculty of the Professions, Adelaide Business School) "The Financial Vulnerability Trap: Using Latent Transition Analysis to Explore the Dynamics of Consumers’ Financial Vulnerability over Time"
20 April - TBA
4 May - Rafal Chomik (CEPAR, UNSW Sydney) "TBA"
3 June - Olivia Mitchell (Wharton School, University of Pennsylvania, CEPAR) "Behavioral Impediments to Valuing Annuities: Evidence on the Effects of Complexity andChoice Bracketing"
Speaker: Piet de Jong (Department of Applied Finance and Actuarial Studies, Macquarie University)
Topic: Lockboxes and Glide Paths
If you are an average Australian you will immediately spend your super when you retire, go on the age pension, and, if aged care is needed, get the government to pony up. With more old people, government age support spending is likely to rocket. Standing idly by is a bloated and inefficient super "helpers" industry, exploiting a captive, ill-informed customer base, corroding retirement savings with fees, and adding no value. I you want to stand on your own retired feet, you won’t find the one product you’ll likely crave: fairly priced pensions. This submission proposes: 1) employees pay for their future age pension and aged care while employed, saving the government an estimated $30 Bn pa; 2) the winding down of the super industry saving an estimated $1,500 pa per employee and doubling retirement incomes; 3) the super system to be properly choreographed so that retirees can buy fairly priced pensions.
Speaker: Geoff Warren (ANU College of Business and Economics)
Topic: The ‘Right’ Level for the Superannuation Guarantee: A Straightforward Issue by No Means
We deploy a stochastic life-cycle model to examine how differing levels of the superannuation guarantee (SG) impact on the welfare of individual Australians under existing superannuation, tax and pension eligibility rules. Our main focus is the effect of various assumptions on the optimal SG, emphasising the role of income and the retirement objectives of the individual. The analysis supports estimating the gains and losses from changing the SG for various individuals, and associated impacts on net government revenue. We find the optimal SG to vary substantially with income and objectives. While our baseline analysis indicates a SG of below the current level of 9.5%, higher estimates emerge if access to the Age Pension is excluded, and if the SG is used as a mechanism to self-insure against living to a very old age, being forced into early retirement, or incurring lower investment returns. We conclude that the case for raising the SG above 9.5% depends on the underlying assumptions, with the policy objectives that the SG is intended to achieve being critical.
Speaker: Ty Leverty (Department of Risk and Insurance, University of Wisconsin-Madison School of Business)
Speaker: Arvid Hoffmann (Faculty of the Professions, Adelaide Business School)
Topic: The Financial Vulnerability Trap: Using Latent Transition Analysis to Explore the Dynamics of Consumers’ Financial Vulnerability over Time
An important question regarding financial vulnerability is not just what makes consumers more or less vulnerable at a particular point in time, but also what drives changes in their vulnerability over time. We explore this question through a Latent Transition Analysis which assesses how individual psychological characteristics predict membership of and transition between states of higher vs. lower financial vulnerability over a three-month period across a nationally representative sample of U.S. consumers. We find that consumers in a state of lower vulnerability are “fragile” in having a relatively high likelihood of moving to a state of higher vulnerability, while those in a state of higher vulnerability are “entrenched” in having a relatively low likelihood of moving to a state of lower vulnerability. We call this pattern of results the “financial vulnerability trap”. We also find that while financial self-efficacy explains state membership, the consideration of future consequences drives state transitions.
Speaker: Rafal Chomik (CEPAR, UNSW Sydney)
Speaker: Olivia S. Mitchell (Wharton School, University of Pennsylvania, CEPAR)
Topic: Behavioral Impediments to Valuing Annuities: Evidence on the Effects of Complexity and Choice Bracketing
This paper examines two behavioral factors that diminish people’s ability to value a lifetime income stream or annuity, drawing on a randomized experiment with about 4,000 adults in a U.S. nationally representative sample. We find that increasing the complexity of the annuity choice reduces respondents’ ability to value the annuity, measured by the difference between the sell and buy values they assign to the annuity. When we limit narrow choice bracketing by inducing people to think first about how quickly or slowly to spend down assets in retirement, their ability to value an annuity increases.