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Pension Economics

ISBN: 978-0-470-05844-2
272 pages
December 2006
Pension Economics (0470058447) cover image
While not attempting to train readers as professional economists, this book aims to provide a secure grounding in the theory and practice of economics insofar as it deals with pension matters. From reading this book, the user will understand:
* The key types of pension scheme
* The role of pensions in maximizing individual lifetime welfare
* The role of pensions in individual savings and retirement decisions
* The role and consequences of the pension plan from the company's viewpoint
* The role of pensions in promoting aggregate savings
* The role of pensions and retirement in overlapping generations models
* The economics of ageing and intergenerational accounting
* The social welfare implications of pensions
* The lessons of behavioural economics for pensions
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Preface.

1 Introduction.

1.1 What is pension economics?

1.2 Types of pension scheme.

1.3 Conclusions.

2 Individual Pension Decision Making.

2.1 The lifecycle model.

2.2 Pensions and savings.

2.3 Pensions and retirement decisions.

2.4 Empirical studies testing the validity of the lifecycle model.

2.5 The Feldstein lifecycle model with induced retirement.

2.6 Conclusions.

3 Corporate Pension Decision Making.

3.1 The provision of pensions by corporations.

3.2 The role of pensions in employment contracts.

3.3 The nature of corporate pension liabilities.

3.4 Quitting and mandatory retirement.

3.5 Tax and pension fund policy.

3.6 Agency costs in pension schemes and pension funds.

3.7 Conclusions.

4 Pensions in the Diamond–Samuelson Overlapping Generations Model with Certain Lifetimes.

4.1 The two-period Diamond–Samuelson OLG model.

4.2 Pensions in the Diamond–Samuelson OLG model with exogenous labour supply and retirement.

4.3 PAYG pensions in the Diamond–Samuelson OLG model with endogenous labour supply and retirement.

4.4 Conclusions.

5 Pensions in the Blanchard–Yaari Overlapping Generations Model with Uncertain Lifetimes.

5.1 The Blanchard–Yaari OLG model with uncertain lifetimes.

5.2 PAYG pensions in the Blanchard–Yaari OLG model with endogenous labour supply and mandatory retirement.

5.3 Conclusions.  

6 The Economics of Ageing and Generational Accounting.

6.1 The macroeconomic effects of ageing: Declining population growth and the increasing dependency ratio.

6.2 Pensions in the Diamond–Samuelson OLG model with a variable population growth rate.

6.3 Generational accounting.

6.4 Conclusions.

7 Risk Sharing and Redistribution in Pension Schemes.

7.1 Risks in private pension schemes.

7.2 Risk sharing in personal pension schemes.

7.3 Risk sharing in occupational pension schemes.

7.4 Redistribution in private pension schemes.

7.5 Private sector market failure and the compensating role of state pension schemes.

7.6 Risks in state pension schemes.

7.7 Risk sharing in state pension schemes.

7.8 Redistribution in state pension schemes.

7.9 The viability of PAYG state pension systems and the transition costs to funding.

8 Behavioural Pension Economics.

8.1 The accumulation phase.

8.2 The decumulation phase.

8.3 Conclusions.

Index.

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Dr. DAVID BLAKE is Professor of Pension Economics and Director of the Pensions Institute at Cass Business School, London, and Chairman of Square Mile Consultants, a training and research consultancy. He was formerly Director of the Securities Industry Programme at City University Business School, Research Fellow at both the London Business School and the London School of Economics and Professor of Financial Economics at Birkbeck College, University of London. He is consultant to many organisations, including Merrill Lynch, Deutsche Bank, Union Bank of Switzerland, Paribas Capital Markets, McKinsey & Co., the Office of Fair Trading, the Office for National Statistics, the Government Actuary’s Department, the National Audit Office, the Department for Work and Pensions, HM Treasury, the Bank of England, the Prime Minister’s Policy Directorate and the World Bank. In June 1996, he established the Pensions Institute, which undertakes high-quality research on all pension-related issues and publishes details of its research activities on the internet (http://www.pensions-institute.org).
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"I have never seen such a concise description of pension institutions that was so crystal clear." (Investments & Pensions Europe, February 2007)

"Informative without being patronizing and set out in a logical sequence with each chapter containing questions to help the reader consolidate what they have just learnt." (Pensions Age, December 2006)

"If you are looking for a solid grounding in the theory and practice of economics in relation to pensions this is a vital addition to your bookshelf." (.net, August 2007)

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