Building Better Retirement Systems in the Wake of the Global Pandemic

Mitchell, Olivia S.

doi:10.2139/ssrn.3616133

Cited by 3 publications

(6 citation statements)

References 72 publications

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“…Our results are in line with earlier US findings on 401(k) accounts during the 2007 financial crisis (Tang et al, 2012) and industry reports about the COVID-19 period (see, e.g. Mitchell, 2020).…”

Section: Summary and Discussionsupporting

confidence: 93%

“…The small response of PPS investors to COVID-19 is in line with earlier US findings on 401(k) accounts during the 2007 financial crisis (Tang et al, 2012) and industry reports about the COVID-19 period (see, e.g. Mitchell, 2020). There are two potential explanations why retirement investors react less to an exogenous market shock such as COVID-19 compared to retail investors.…”

Section: Introductionsupporting

confidence: 86%

“…Finally, to ease financial shortfalls during COVID-19, several countries have facilitated the withdrawal of capital from their retirement and unemployment funds, including Australia, Chile, Peru and the US (Mitchell, 2020). We find no effects at all on public pension withdrawals in Sweden, while evidence from US 401(k) plans indicates a small share of workers (<5%) taking COVID-related early withdrawals (Bernard, 2021;Tergesen, 2021).…”

Section: Introductionmentioning

confidence: 67%

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Trading behavior of Swedish retirement investors during the COVID-19 pandemic

Hagen

Malisa

Post

2022

RBF

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PurposeHow did investors in the Swedish Premium Pension System (PPS) react to the stock market shock ignited by the COVID-19 pandemic?Design/methodology/approachThe authors use fund-level data from the Swedish Pensions Agency on investment choices in the PPS. For each fund, the authors use monthly information on the number of investors and holdings' market value up to November 2020. The authors also use information on the total number of portfolio changes per day. For analyzing whether PPS investors reacted to the pandemic with claiming their pension, the authors use monthly data on the number of investors of a certain age group who initiate their public pension payment.FindingsTrades more than doubled, and shifted capital from equity funds to low risk interest funds. In economic terms, however, trading stayed at low levels–less than two percent of investors traded in March 2020 and there was no effect on pension withdrawals. The increased trading during the market tumult was disproportionately concentrated among investors in the top of the pension capital distribution.Research limitations/implicationsWith fund-level data, the authors cannot investigate what in particular made retirement investors stay calm in the midst of a severe market decline. Either, those investors have a long-term investment horizon as they save for their pension or particular features of the system's choice architecture induce inertia and discourage from trading. The sub-group analyses are more consistent with the explanation that PPS-induced inertia is responsible for the relatively small increase in trading activity, but future research could exploit individual level data to explore this in more detail.Practical implicationsThe often-criticized PPS choice architecture provided positive side effects in times of a severe market shock by shielding retail investors from committing trading mistakes when trying to outsmart the market.Originality/valueThe study complements previous evidence on the effects of COVID-19 on investor activity. The small response of PPS investors to COVID-19 is in line with earlier US findings on 401(k) accounts during the 2007 financial crisis (Tang et al., 2012) and industry reports about the COVID-19 period (see, e.g. Mitchell, 2020). The authors find no effects at all on public pension withdrawals in Sweden, while evidence from US 401(k) plans indicates a small share of workers taking COVID-related early withdrawals.

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Section: Summary and Discussionsupporting

confidence: 93%

Section: Introductionsupporting

confidence: 86%

Section: Introductionmentioning

confidence: 67%

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Trading behavior of Swedish retirement investors during the COVID-19 pandemic

Hagen

Malisa

Post

2022

RBF

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“…The COVID-19 pandemic has wrought not only profound damage to peoples' health around the world but also to households' finances (Achou et al 2020, Lusardi et al, 2020, Mitchell 2020). The short-term economic impacts for spending, debt, and unemployment have been recently examined by numerous researchers and policymakers (e.g., Baker et al 2020, Hanspal et al, 2020).…”

Section: And Orly Sadementioning

confidence: 99%

Longevity Perceptions and Saving Decisions during the COVID-19 Outbreak: An Experimental Investigation

Hurwitz¹,

Mitchell²,

Sade³

2021

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We experimentally study individuals' perceptions about and advice to others regarding retirement savings and annuitization during the pandemic. Many people recommend that others save more for retirement, but those most affected by the pandemic tell others to save and annuitize less. We investigate two possible channels for this result and show that the pandemic does not substantially alter optimism regarding survival probabilities. Hence, we conclude that economic factors are driving our results. Consequently, some financial ramifications of the COVID-19 outbreak are yet to be revealed, as the pandemic is having longer-term effects on peoples' willingness to save and annuitize.

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“…In addition, the CARES Act also authorized certain coronavirus-related distributions (CRDs) from pensions and IRAs of up to $100,000 in 2020 and increased the defined contribution plan loan limits to the greater of $100,000 or 100% of the vested account balance (Internal Revenue Service, 2020b;VanDerhei, 2020a). As a result of these legislative changes, the COVID-19 pandemic is likely to have an adverse impact on the retirement savings of many workers (see, e.g., Mitchell, 2020;VanDerhei, 2020b).…”

mentioning

confidence: 99%

Shoring Up Shortfalls: Women, Retirement, and the Growing GigSupp Economy

Bruckner¹,

Forman²

2021

JOR

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In recent years, high-profile Silicon Valley firms have engineered billion-dollar IPOs through developing online and app-based platforms that connect service providers and sellers with customers and process their payments (the "online platform economy"). Today, millions of Americans earn income using platforms developed by Uber, Etsy, and Airbnb; and research has identified the limitations of existing federal tax rules to facilitate tax compliance of these workers and considered the consequences of their failure to pay self-employment taxes. However, questions remain as to the changing demographics and motivations of online platform economy workers and their retirement income security. Titled, Shoring Up Shortfalls: Women, Retirement and the Growing Gig Economy, we propose to identify and analyze: (i) the existing demographic data on this workforce; (ii) their economic motivations and retirement income needs; and (iii) the federal tax, retirement policy, and financial literacy proposals that would enable the gig economy workforce to support itself in retirement.

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Building Better Retirement Systems in the Wake of the Global Pandemic

Cited by 3 publications

References 72 publications

Trading behavior of Swedish retirement investors during the COVID-19 pandemic

Trading behavior of Swedish retirement investors during the COVID-19 pandemic

Longevity Perceptions and Saving Decisions during the COVID-19 Outbreak: An Experimental Investigation

Shoring Up Shortfalls: Women, Retirement, and the Growing GigSupp Economy

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