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Thesis advisor: Matthew Rutledge / This paper explores the relationship between social security wealth (SSW) and the decision to retire early in five countries: the United States, Germany, Denmark, Poland, and Australia. Individual probit regressions are used to analyze the impact of SSW on early retirement in each specific country. Next, a cross-country probit model including the United States, Germany, and Denmark is estimated to highlight the same relationship in three very different social insurance schemes. Finally, a counterfactual experiment is run in order to examine the impact of a 6.67 percent benefit cut on the likelihood of early retirement. This paper finds that SSW is associated with a greater likelihood of early retirement in the United States, Poland, and Denmark. However, these results are only statistically significant in the United States and Poland. Conversely, the relationship is statistically significant and negative in Australia, and statistically insignificant and negative in Germany. The counterfactual experiment reinforces these findings, demonstrating a particularly high responsiveness of a benefit cut in Denmark and Poland relative to the other countries. The results of the cross-country model finds that SSW has the largest positive effect on early retirement in the United States, followed by Germany, and finally Denmark. However, these contradictory results are not statistically significant. This paper presents interesting policy implications to consider in the United States. The statistically significant but small effect of SSW on early retirement in the United States indicates that policies aimed at reducing benefits as a means of decreasing the likelihood of early retirement may not be the most effective. Additionally, the creation of a system similar to Australia’s low-cost superannuation may be worth investigating, as superannuation benefits appear to have a similar negative impact on early retirement as pension benefits in the United States. / Thesis (BA) — Boston College, 2017. / Submitted to: Boston College. College of Arts and Sciences. / Discipline: Departmental Honors. / Discipline: Economics.

This research discusses the use of Delta in regulating the investment behaviour of the Trustees of Self-Managed Superannuation Funds (SMSFs) who use Exchange Traded Options (ETOs) in their investment strategies. An ETO represents a contract between two parties, giving the taker (the buyer) the right, but not the obligation, to buy or sell a parcel of shares at a predetermined price, on or before a predetermined date, to or from the writer (the seller). It is acceptable for SMSF Trustees to use ETO investments as part of their overall investment strategy, providing that leverage or mere speculation are not the reasons behind that investment. It is important to note that neither the Regulator, the Australian Taxation Office (ATO), nor its predecessor, the Australian Prudential Regulatory Authority (APRA), actually state what constitutes 'speculation', or what the allowable uses for derivatives are. There are no practical guidelines. This is a key issue for this research, which aims, as practically as possible, to fill these crucial gaps. A Trustee must abide by their superannuation fund's overriding covenants and investment strategy, and inform its members, through Risk Management Statements, of the trust's derivative strategy. While ETOs can be used to manage risk, they also carry a level of risk themselves. Delta measures an ETO's value movement in correlation with a movement in the option's underlying share price. An ETO carrying a low Delta generally means a cheaper price (premium) per contract than an option carrying a higher Delta. The lower the Delta, however, the lower the chance there is of a positive result for the buyer. This research shows that an ETO Delta of less than 0.2 gives results in favour of buyers in only 11 out of 100 occurrences. This figure rises to 42 out of 100 when Delta is greater than 0.8. From the sampled data, there is an overall financial loss to the buyer of -1.91%, with the financial return results being mixed at all levels of Delta. The overall return results have been compiled without preference to market direction, and clearly highlight the natural premium bias (which the buyer pays) to the seller. What this data does is reenforce the need for Trustees to have a solid view of market directions, or a set strategy in place, as buyers of ETOs. The conclusions drawn from the findings show that the chance of loss (when buying), or gain (when selling) ETOs with a Delta of; - less than 0.20 is 89%; - less than 0.40 is 74%; - less than 0.60 is 66%; - less than 0.80 is 57%; - greater than 0.80 is 58%; For example, a Trustee buying an ETO with a Delta of less than 0.20, faces an 89% chance of loss; a Trustee selling an ETO with a Delta of less than 0.20, faces an 89% chance of gain. The findings on overall financial returns (profit or loss) offer additional support to this critical review of Delta as a risk measurement tool. Whist it is impossible to know the motives or actual positions of portfolio managers of SMSF at any time, the aim of the thesis is to provide a measurement tool that can be used to assist the trustee at any given time by measuring the option risk element alone. When interpreting the findings, the reader must remember that ETO strategies are numerous, and a high-risk profile for one strategy may represent a low risk for another. Further to this, an ETO strategy's risk profile may change with the overlaying of another ETO. For example, where a Call option is bought, the risk involved in that purchase is represented by the premium paid. However, another Call option can then be sold against that position, with a later (or earlier) date to expiry, and with a higher strike price. This 'overlay' reduces the initial risk, but impacts on the maximum gain. It is vital that Trustees have a solid understanding of the basics of ETO strategies before considering using Delta as a measure of risk. The research proposes some guidelines Trustees can use when assessing an ETO strategy against their derivative/investment risk profile. For example, a Trustee buying an ETO with a Delta of less than 0.20, faces an 89% chance of loss; a Trustee selling an ETO with a Delta of less than 0.20, faces an 89% chance of gain. The findings on overall financial returns (profit or loss) offer additional support to this critical review of Delta as a risk measurement tool. Whist it is impossible to know the motives or actual positions of portfolio managers of SMSF at any time, the aim of the thesis is to provide a measurement tool that can be used to assist the trustee at any given time by measuring the option risk element alone. When interpreting the findings, the reader must remember that ETO strategies are numerous, and a high-risk profile for one strategy may represent a low risk for another. Further to this, an ETO strategy's risk profile may change with the overlaying of another ETO. For example, where a Call option is bought, the risk involved in that purchase is represented by the premium paid. However, another Call option can then be sold against that position, with a later (or earlier) date to expiry, and with a higher strike price. This 'overlay' reduces the initial risk, but impacts on the maximum gain. It is vital that Trustees have a solid understanding of the basics of ETO strategies before considering using Delta as a measure of risk. The research proposes some guidelines Trustees can use when assessing an ETO strategy against their derivative/investment risk profile. (table inserted) The findings from 2400 data samples show strong trends in support of the underlying premise (see Figure: Positive Results Versus Delta (ETO Buyers) below). Given these findings, the research concludes that Delta can be used as a measure of risk by SMSF Trustees. Delta may not be suitable, however, for measuring multiple layers of combined ETO positions, a type of derivative strategy not suited to or usual in the context of measuring risk within a SMSF. (table inserted) There is a major difference between simple and simplistic solutions offering practical answers in an environment of increasing complexity. Often, simple solutions offer far more value to the less experienced, when compared to complex ones, especially given the growing number of SMSFs, and the increasing lack of expertise in the areas of superannuation and risk management that this growth implies.

Until 1980 in Australia, occupational superannuation had played only a peripheral role in securing retirement savings for the workforce at large with less than 40% of all employees at this time receiving superannuation benefits. By the time the twenty-first century began, however, 91% of all Australian employees and 81% of all workers were covered by superannuation, and, by 2007, total superannuation assets had reached $1.2 trillion with superannuation fund balances the largest financial asset held by households. This substantial growth in superannuation coverage did not occur as a result of free market forces operating between producers and consumers in the superannuation industry. Rather, this increase was found to be directly related to the level of intervention in the industry by both the Labor and Coalition Governments throughout the last three decades. / The rationale provided by these Governments highlighted the public interest necessity of ensuring that there was an adequate coverage, level and rate of growth of retirement savings. Criticisms of this rationale have, however, continued to grow unabated. These concerns focus on the failure of the regulatory regime changes introduced to actually achieve their public-interest rationales in terms of improving Australia’s national savings rates or to produce effective governance mechanisms to protect the security of the worker-owned trillion-dollar asset pool now under investment. / The primary objective of this thesis was to investigate these opposing claims (within the framework of the public interest and private interest theories of regulation), via the combination of a detailed literature review and a statistical analysis which utilised factor analysis, and logistic and multiple regression modelling techniques. / This combined analysis suggested three primary conclusions: / (1) the origins of the regulatory regime change process needed to be considered as a political game with the simultaneously experienced detriments of key interest groups resulting in a groundswell of pro-regulatory reform activity which sought to obtain relief from “suffering”. The private interest prediction that governments/politicians in electoral democracies were concerned about finding a support coalition to promote their re-election chances was, therefore, confirmed; / (2) in comparison, there was less than convincing evidence to support the public interest claims of bothgovernments in relation to the origins of the regime change process; and / (3) as opposed to these origins-related findings, the regulatory impact story analysis of the review period confirmed that the primary “winner” of the regulatory regime changes was the fund manager group in general and the large, incumbent, life office entities in particular with statistically significant improvements in fund manager “detriments” (e.g. in terms of the total superannuation assets held within the statutory funds of life offices variable). While the government/politicians group was also a “winner” given the significant increases in the “bureaucratic empire building” variable, it was a significant “loser” in terms of the downturn in the public interest variables of household savings rates, net personal savings rates and voluntary superannuation contributions. The ACTU, the employers and workers in general were also all “losers” in that: union membership rates were characterised by downturns; employers do not appear to have been able to “offset” increased occupational superannuation benefits with reductions in wages and/or employment levels; and there was no significant improvement in either of the fund member indicators (i.e. in terms of the fund member welfare index or their real rate of returns). Thus, the private interest prediction that, in terms of regulatory impacts/outcomes, there would be significant wealth transfers away from fund members primarily to the fund managers was confirmed. / These findings raise implications for the ongoing development of regulation in this area which will need further consideration. For example, is it likely that future, private interest-based regulatory changes will be imposed on the occupational superannuation industry which will lead to further detriments to fund members and increasing wealth transfers to the fund managers? Alternatively, is it likely that, at some point, a regulatory backlash will occur which could lead to more public interest outcomes? Or, is it possible that the interest groups studied might “mutate” or change to adapt to future circumstances which could then, in some future period, change the “winning” and “losing” profiles highlighted in this research? Also of interest is whether these findings, which were performed within a relatively unique set of political circumstances, are robust to alternative settings or time periods? These issues are ideal topics for future research projects.

Until 1980 in Australia, occupational superannuation had played only a peripheral role in securing retirement savings for the workforce at large with less than 40% of all employees at this time receiving superannuation benefits. By the time the twenty-first century began, however, 91% of all Australian employees and 81% of all workers were covered by superannuation, and, by 2007, total superannuation assets had reached $1.2 trillion with superannuation fund balances the largest financial asset held by households. This substantial growth in superannuation coverage did not occur as a result of free market forces operating between producers and consumers in the superannuation industry. Rather, this increase was found to be directly related to the level of intervention in the industry by both the Labor and Coalition Governments throughout the last three decades. / The rationale provided by these Governments highlighted the public interest necessity of ensuring that there was an adequate coverage, level and rate of growth of retirement savings. Criticisms of this rationale have, however, continued to grow unabated. These concerns focus on the failure of the regulatory regime changes introduced to actually achieve their public-interest rationales in terms of improving Australia’s national savings rates or to produce effective governance mechanisms to protect the security of the worker-owned trillion-dollar asset pool now under investment. / The primary objective of this thesis was to investigate these opposing claims (within the framework of the public interest and private interest theories of regulation), via the combination of a detailed literature review and a statistical analysis which utilised factor analysis, and logistic and multiple regression modelling techniques. / This combined analysis suggested three primary conclusions: / (1) the origins of the regulatory regime change process needed to be considered as a political game with the simultaneously experienced detriments of key interest groups resulting in a groundswell of pro-regulatory reform activity which sought to obtain relief from “suffering”. The private interest prediction that governments/politicians in electoral democracies were concerned about finding a support coalition to promote their re-election chances was, therefore, confirmed; / (2) in comparison, there was less than convincing evidence to support the public interest claims of bothgovernments in relation to the origins of the regime change process; and / (3) as opposed to these origins-related findings, the regulatory impact story analysis of the review period confirmed that the primary “winner” of the regulatory regime changes was the fund manager group in general and the large, incumbent, life office entities in particular with statistically significant improvements in fund manager “detriments” (e.g. in terms of the total superannuation assets held within the statutory funds of life offices variable). While the government/politicians group was also a “winner” given the significant increases in the “bureaucratic empire building” variable, it was a significant “loser” in terms of the downturn in the public interest variables of household savings rates, net personal savings rates and voluntary superannuation contributions. The ACTU, the employers and workers in general were also all “losers” in that: union membership rates were characterised by downturns; employers do not appear to have been able to “offset” increased occupational superannuation benefits with reductions in wages and/or employment levels; and there was no significant improvement in either of the fund member indicators (i.e. in terms of the fund member welfare index or their real rate of returns). Thus, the private interest prediction that, in terms of regulatory impacts/outcomes, there would be significant wealth transfers away from fund members primarily to the fund managers was confirmed. / These findings raise implications for the ongoing development of regulation in this area which will need further consideration. For example, is it likely that future, private interest-based regulatory changes will be imposed on the occupational superannuation industry which will lead to further detriments to fund members and increasing wealth transfers to the fund managers? Alternatively, is it likely that, at some point, a regulatory backlash will occur which could lead to more public interest outcomes? Or, is it possible that the interest groups studied might “mutate” or change to adapt to future circumstances which could then, in some future period, change the “winning” and “losing” profiles highlighted in this research? Also of interest is whether these findings, which were performed within a relatively unique set of political circumstances, are robust to alternative settings or time periods? These issues are ideal topics for future research projects.

This diploma work analyse probléme connected with supplementary pension insurance of Alca plast, s.r.o. copany. It includes a draft of choice of an adequate pension fond and propsal of employer s contribution payments of pension insurance for individua employees with the purpose to eliminace company costs.

The aim of this thesis is to investigate how members of Australian superannuation funds can manage risks arising from uncertain security returns and unpredictable mortality so as to ensure a steady income stream during retirement. In chapter 2 we note that the proportion of superannuation assets invested in foreign assets has increased over the past two decades, exposing investors to currency risk. Surveys of superannuation funds verify that most international bond holdings, but not equity holdings, have been hedged for currency risk. We test the mean-variance efficiency of this practice against two alternative hedging strategies: a conventional forward hedge and a selective hedge conditioned on the domestic-foreign interest differential. Implementing optimal hedging results in portfolios whose returns stochastically dominate portfolios constructed under restricted equity hedging, according to our new adaptation of Barrett-Donald (2003) tests. Selective hedging works best for equities and conventional hedging for bonds. Chapter 3 applies a discrete-time Merton (1971) model to questions of optimal decumulation and asset allocation for self-funded retirees drawing down lump-sum retirement benefits. Risk management is taken to revolve around protecting a pre-specified minimum consumption stream. Risk tolerances and lifetimes are allowed to span a range of possibilities. In the case of an agent living to age 90, ideal investment in equity-type assets increases gradually from 27-43 % over remaining life. This is much lower than the 55-60% observed among retirees. Conservative investment strategies are needed to meet consumption goals over long lifetimes. Milevsky and Young (2002, 2003) attribute the reluctance to voluntarily annuitise to a valuable real option to delay annuitisation (RODA). Chapter 4 extends the RODA analysis to the case of HARA preferences. A formula for the optimal timing of annuitisation is derived from the solution to a dynamic stochastic consumption and investment problem with uncertain lifetime. The effect of introducing a consumption floor is to reduce the delay before annuity purchase. As in the CRRA case, delayed annuitisation is associated with optimistic predictions of the Sharpe ratio and divergence between annuity purchaser and provider predictions of mortality.

The diploma work is oriented on the additional pension insurance (superannuation scheme) and on it{\crq}s value as a reserve for the retirement age. In the theoretical part there is described the history of the additional pension insurance, main terms and definition and next there are in detail described the particular pension funds and their rentability. The theoretical part finishes with the integral part of the additional pension insurance, which is the tax prefference. In the introduction of the practical part there I am concerned with the pension reform, because the additional pension insurance is an instrument used for saving for the pension age. The pension reform has three phases. The first phase already has been confirmed by the government and it{\crq}s main consequence are the rules for the retirement. Next two phases are being discussed. No matter how the discussion about the reform ends I consider as reasonable to care of securing myself in the future by using the additional pension insurance. This is demonstrated on four independent examples, where I show that it is advantageous to start saving money by additional pension insurance. In the final phase of the practical part there is the general conclusion of the diploma work and my own opinion about the importance of the additional pension insurance.

A theme of the master’s thesis is to describe current state of capital market and pension system in the Czech Republic. It includes a list of laws that are relevant to this topic. Foreign pension systems are also described. A main is Proposel Part where for concrete person are proposed variations of saving or investing to keep money in reserve for retirement. In each variation is described advantage and disadvantage of this solution.