Recently, a new type of variable annuity has been marketed to investors which is based on structured product-like investments instead of the mutual fund-like investments found in traditional variable annuities. Embedding a structured product into a variable annuity introduces substantial complexity into an investment typically considered conservative. In this paper, we describe structured product based variable annuity (spVA) crediting formulas and how they differ from traditional VAs, value the embedded derivative position for a range of example parameters, and calculate the fair cap levels required to fairly compensate investors for the derivative position. We also provide extensive backtests of spVA crediting formulas using our calculated cap levels and compare the results to their underlying indexes. Our findings suggest that the complexity of spVAs can be used to hide fees and reduce the comparability of variable annuities to other investments in the market.
{"title":"Structured Product Based Variable Annuities","authors":"Geng Deng, Tim Dulaney, Tim Husson, C. McCann","doi":"10.2139/ssrn.2049513","DOIUrl":"https://doi.org/10.2139/ssrn.2049513","url":null,"abstract":"Recently, a new type of variable annuity has been marketed to investors which is based on structured product-like investments instead of the mutual fund-like investments found in traditional variable annuities. Embedding a structured product into a variable annuity introduces substantial complexity into an investment typically considered conservative. In this paper, we describe structured product based variable annuity (spVA) crediting formulas and how they differ from traditional VAs, value the embedded derivative position for a range of example parameters, and calculate the fair cap levels required to fairly compensate investors for the derivative position. We also provide extensive backtests of spVA crediting formulas using our calculated cap levels and compare the results to their underlying indexes. Our findings suggest that the complexity of spVAs can be used to hide fees and reduce the comparability of variable annuities to other investments in the market.","PeriodicalId":76903,"journal":{"name":"Employee benefits journal","volume":"22 2","pages":""},"PeriodicalIF":0.0,"publicationDate":"2013-09-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"72398978","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The goal of this paper is to review and comment on certain aspects of the Pension Insurance Modeling System (PIMS) and certain actuarial assumptions used by PIMS. The apparent stability of the deficit and funding ratio of the PBGC are partially dependent on a continued stream of premium payments from plan sponsors. However, derisking and other trends among retirement plans may change the pattern of premium income. Deterministic projections that supplement the stochastic simulations may enhance the understanding of the current deficit and the projected net claims over the next ten years.
{"title":"Observations on Actuarial Assumptions and Models for Defined Benefit Pension Plans","authors":"D. Fuerst","doi":"10.2139/SSRN.2337141","DOIUrl":"https://doi.org/10.2139/SSRN.2337141","url":null,"abstract":"The goal of this paper is to review and comment on certain aspects of the Pension Insurance Modeling System (PIMS) and certain actuarial assumptions used by PIMS. The apparent stability of the deficit and funding ratio of the PBGC are partially dependent on a continued stream of premium payments from plan sponsors. However, derisking and other trends among retirement plans may change the pattern of premium income. Deterministic projections that supplement the stochastic simulations may enhance the understanding of the current deficit and the projected net claims over the next ten years.","PeriodicalId":76903,"journal":{"name":"Employee benefits journal","volume":"65 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2013-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"82364703","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Individual investors are extremely vulnerable to the sequence of market returns experienced over their investing lifetimes. Individuals who behave exactly the same over their careers, saving the same percentage of the same salary for the same number of years, can otherwise experience very different outcomes based solely upon the specific sequence of investment returns which accompanies their career and retirement. The vulnerability reaches its peak at the retirement date, as this is the point in which a return to employment becomes increasingly difficult and a post-retirement market drop can be devastating. Actual wealth accumulations and sustainable withdrawal rates will vary substantially for different retirees, as these outcomes depend disproportionately on the shorter sequence of returns just before and after the retirement date.
{"title":"The Lifetime Sequence of Returns: A Retirement Planning Conundrum","authors":"W. Pfau","doi":"10.2139/SSRN.2544637","DOIUrl":"https://doi.org/10.2139/SSRN.2544637","url":null,"abstract":"Individual investors are extremely vulnerable to the sequence of market returns experienced over their investing lifetimes. Individuals who behave exactly the same over their careers, saving the same percentage of the same salary for the same number of years, can otherwise experience very different outcomes based solely upon the specific sequence of investment returns which accompanies their career and retirement. The vulnerability reaches its peak at the retirement date, as this is the point in which a return to employment becomes increasingly difficult and a post-retirement market drop can be devastating. Actual wealth accumulations and sustainable withdrawal rates will vary substantially for different retirees, as these outcomes depend disproportionately on the shorter sequence of returns just before and after the retirement date.","PeriodicalId":76903,"journal":{"name":"Employee benefits journal","volume":"11 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2013-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"78586570","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Is there an obesity externality? In the late 1990s and early 2000s, many state governments began requiring health insurance plans to cover treatments for diabetes. Using difference-in-difference analysis of restricted geocode data from the 1979 National Longitudinal Survey of Youth to compare wages across states with and without diabetes mandates, I find that obese people pay for all of their own increased health costs in the form of lower wages, rather than passing them on to employers, insurers, and co-workers.
肥胖是否存在外部性?在20世纪90年代末和21世纪初，许多州政府开始要求医疗保险计划涵盖糖尿病的治疗。通过对1979年全国青年纵向调查(National Longitudinal Survey of Youth)中有限地理编码数据的差异分析，我比较了有和没有糖尿病规定的各州的工资，发现肥胖人群以较低工资的形式支付了他们自己增加的所有医疗成本，而不是将其转嫁给雇主、保险公司和同事。
{"title":"Who Pays for Obesity? Evidence from Health Insurance Benefit Mandates","authors":"James Bailey","doi":"10.2139/ssrn.2317616","DOIUrl":"https://doi.org/10.2139/ssrn.2317616","url":null,"abstract":"Is there an obesity externality? In the late 1990s and early 2000s, many state governments began requiring health insurance plans to cover treatments for diabetes. Using difference-in-difference analysis of restricted geocode data from the 1979 National Longitudinal Survey of Youth to compare wages across states with and without diabetes mandates, I find that obese people pay for all of their own increased health costs in the form of lower wages, rather than passing them on to employers, insurers, and co-workers.","PeriodicalId":76903,"journal":{"name":"Employee benefits journal","volume":"16 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2013-08-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"72614170","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Our review of the evidence found that the notion that higher pay leads to the selection of better executives is undermined by the prevalence of poor recruiting methods. Moreover, higher pay fails to promote better performance. Instead, it undermines the intrinsic motivation of executives, inhibits their learning, leads them to ignore other stakeholders, and discourages them from considering the long-term effects of their decisions on stakeholders. Relating incentive payments to executives’ actions in an effective manner is not possible. Incentives also encourage unethical behaviour. Organizations would benefit from using validated methods to hire top executives, reducing compensation, eliminating incentive plans, and strengthening stockholder governance related to the hiring and compensation of executives.
{"title":"Are Top Executives Paid Enough? An Evidence-Based Review","authors":"Philippe Jacquart, J. Armstrong","doi":"10.2139/ssrn.2207600","DOIUrl":"https://doi.org/10.2139/ssrn.2207600","url":null,"abstract":"Our review of the evidence found that the notion that higher pay leads to the selection of better executives is undermined by the prevalence of poor recruiting methods. Moreover, higher pay fails to promote better performance. Instead, it undermines the intrinsic motivation of executives, inhibits their learning, leads them to ignore other stakeholders, and discourages them from considering the long-term effects of their decisions on stakeholders. Relating incentive payments to executives’ actions in an effective manner is not possible. Incentives also encourage unethical behaviour. Organizations would benefit from using validated methods to hire top executives, reducing compensation, eliminating incentive plans, and strengthening stockholder governance related to the hiring and compensation of executives.","PeriodicalId":76903,"journal":{"name":"Employee benefits journal","volume":"28 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2013-08-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"87005377","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In this paper, we estimate the effect of benefits and work incentives counseling services on labor market outcomes of Supplemental Security Income (SSI) and Social Security Disability Insurance (SSDI) beneficiaries participating in the vocational rehabilitation (VR) programs in the period between 2003 and 2009 in New York State. By explicitly controlling for non-random selection of beneficiaries into the services using the propensity score matching and instrumental variable methods, the paper contributes to the literature by providing more precise estimates of causal relationships between benefits and work incentives counseling services and several labor market outcomes of beneficiaries. We find that the effect of benefits and work incentives counseling on the probability of successful case closure can be positive, but in certain cases is not statistically significant. At the same time, the estimates of the effects of benefits and work incentives counseling on earnings and working hours at closure are positive and substantial in magnitude. The provision of benefits and work incentives counseling can be considered as a first and important step toward achieving financial independence for the large group of SSI/SSDI beneficiaries with strong employment goals.
{"title":"Can Benefits and Work Incentives Counseling Be a Path to Future Economic Self-Sufficiency for SSI/SSDI Beneficiaries?","authors":"Zafar Nazarov","doi":"10.2139/ssrn.2308947","DOIUrl":"https://doi.org/10.2139/ssrn.2308947","url":null,"abstract":"In this paper, we estimate the effect of benefits and work incentives counseling services on labor market outcomes of Supplemental Security Income (SSI) and Social Security Disability Insurance (SSDI) beneficiaries participating in the vocational rehabilitation (VR) programs in the period between 2003 and 2009 in New York State. By explicitly controlling for non-random selection of beneficiaries into the services using the propensity score matching and instrumental variable methods, the paper contributes to the literature by providing more precise estimates of causal relationships between benefits and work incentives counseling services and several labor market outcomes of beneficiaries. We find that the effect of benefits and work incentives counseling on the probability of successful case closure can be positive, but in certain cases is not statistically significant. At the same time, the estimates of the effects of benefits and work incentives counseling on earnings and working hours at closure are positive and substantial in magnitude. The provision of benefits and work incentives counseling can be considered as a first and important step toward achieving financial independence for the large group of SSI/SSDI beneficiaries with strong employment goals.","PeriodicalId":76903,"journal":{"name":"Employee benefits journal","volume":"35 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2013-08-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"80686722","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This article reviews in detail the entire body of employment-related decisions of the 2012 October Term of the Supreme Court of the United States and provides a summary and author's commentary on each case. The article covers not only traditional employment decisions, but also arbitration, class action and other adjective issues relating to how employment disputes are litigated and resolved. The author (who has published this annual review for more than two decades) also offers a number of observations about larger themes, jurisprudential and otherwise, revealed by the Court's oversight of the employment relationship. Finally, the article summarizes the grants of certiorari in employment-related cases for the upcoming term.
{"title":"2013 Supreme Court Employment Law Commentary","authors":"J. Harkavy","doi":"10.2139/ssrn.2309754","DOIUrl":"https://doi.org/10.2139/ssrn.2309754","url":null,"abstract":"This article reviews in detail the entire body of employment-related decisions of the 2012 October Term of the Supreme Court of the United States and provides a summary and author's commentary on each case. The article covers not only traditional employment decisions, but also arbitration, class action and other adjective issues relating to how employment disputes are litigated and resolved. The author (who has published this annual review for more than two decades) also offers a number of observations about larger themes, jurisprudential and otherwise, revealed by the Court's oversight of the employment relationship. Finally, the article summarizes the grants of certiorari in employment-related cases for the upcoming term.","PeriodicalId":76903,"journal":{"name":"Employee benefits journal","volume":"13 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2013-07-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"85384196","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
ABSTRACT: Using a sample of S&P 1500 firms, we examine the selection of peer groups to set executive compensation. We document that the researcher-defined pool of potential peers significantly influences whether one concludes that the selection of peers is opportunistically biased to increase sample firm pay. With a broad pool of potential peers, opportunism seems more evident but when the potential peers are culled to a group that might better reflect the CEO labor market, selection appears less opportunistic. This finding is reinforced when we examine and find that differences in economic or compensation characteristics are largely unrelated to sample firm pay, even in settings in which we would most expect opportunism.
{"title":"Compensation Peer Groups and Their Relation with CEO Pay","authors":"Brian D. Cadman, Mary Ellen Carter","doi":"10.2139/ssrn.1349997","DOIUrl":"https://doi.org/10.2139/ssrn.1349997","url":null,"abstract":"ABSTRACT: Using a sample of S&P 1500 firms, we examine the selection of peer groups to set executive compensation. We document that the researcher-defined pool of potential peers significantly influences whether one concludes that the selection of peers is opportunistically biased to increase sample firm pay. With a broad pool of potential peers, opportunism seems more evident but when the potential peers are culled to a group that might better reflect the CEO labor market, selection appears less opportunistic. This finding is reinforced when we examine and find that differences in economic or compensation characteristics are largely unrelated to sample firm pay, even in settings in which we would most expect opportunism.","PeriodicalId":76903,"journal":{"name":"Employee benefits journal","volume":"158 1 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2013-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"83228430","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Since the passage of the PPACA, employers have expended time and capital in hope of understanding the complexities accompanying it. Under the guidance of numerous attorneys and healthcare professionals researching the statute, employers now find themselves well equipped to ensure that they can navigate the Act to their benefit. On January 1st, 2014 the PPACA will begin to go into effect and those who expected to benefit from it will find that the Act, unless remedied, will not live up to its expectations. This note discusses the faults contained in the Act, how employers will seek to exploit these faults, and what should be done to insure that Congress’ goal is met.
{"title":"Dream Deferred: The Employees’ Struggle for Health Care Continues","authors":"A. Vacca, Reema Sultan","doi":"10.2139/ssrn.2329928","DOIUrl":"https://doi.org/10.2139/ssrn.2329928","url":null,"abstract":"Since the passage of the PPACA, employers have expended time and capital in hope of understanding the complexities accompanying it. Under the guidance of numerous attorneys and healthcare professionals researching the statute, employers now find themselves well equipped to ensure that they can navigate the Act to their benefit. On January 1st, 2014 the PPACA will begin to go into effect and those who expected to benefit from it will find that the Act, unless remedied, will not live up to its expectations. This note discusses the faults contained in the Act, how employers will seek to exploit these faults, and what should be done to insure that Congress’ goal is met.","PeriodicalId":76903,"journal":{"name":"Employee benefits journal","volume":"82 12","pages":""},"PeriodicalIF":0.0,"publicationDate":"2013-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"72394352","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2013-05-01DOI: 10.1016/J.JPUBECO.2015.07.005
Alan L. Gustman, Thomas L. Steinmeier
{"title":"Effects of Social Security Policies on Benefit Claiming, Retirement and Saving","authors":"Alan L. Gustman, Thomas L. Steinmeier","doi":"10.1016/J.JPUBECO.2015.07.005","DOIUrl":"https://doi.org/10.1016/J.JPUBECO.2015.07.005","url":null,"abstract":"","PeriodicalId":76903,"journal":{"name":"Employee benefits journal","volume":"34 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2013-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"86456051","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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