Reshaping Retirement Security Lessons from the Global Financial Crisis

The worldwide financial crisis has wrought deep changes in capital and labor markets, old-age retirement systems, and household retirement and consumption patterns. Confidence has been shaken in both the traditional defined benefit and defined contribution plans. Around the world, plan sponsors, fiduciaries, policymakers, and households have gained a new awareness of retirement risk. When pressed to reform post-crisis, many would recommend enhancing financial advice for plan participants, emphasizing flexibility and the positive effect of working another one or two years to make up for investment losses in the downturn. Adding to this is the continuing need for financial education, essential as the retirement system moves increasingly toward personal account pensions. Perhaps most important of all is the need for greater understanding of risk throughout the retirement security system, along with new approaches to re-engineering retirement pensions. This volume explores the lessons to be learnt for retirement planning and long-term financial security in view of the massive shocks to stock markets, labour markets, and pension plans resulting from the financial crisis. It aims to rethink retirement in the new economic era, including the resilience of defined contribution plans and how defined benefit plans reacted to the financial crisis.

Raimond Maurer holds the endowed Chair of Investment, Portfolio Management, and Pension Finance in the Finance Department at the Goethe University of Frankfurt. His research focuses on asset management, life-time portfolio choice, and pension finance. He serves in professional capacities for the Society of Actuaries, the Association of Certified International Investment Analysts, and the Advisory Board of the Wharton School's Pension Research Council. He received his habilitation, his Ph.D., and his Diploma in business from Mannheim University.

Olivia S. Mitchell is the International Foundation of Employee Benefit Plans Professor of Insurance and Risk Management at the Wharton School, University of Pennsylvania. Her main areas of interest are private and public insurance, risk management, public finance, labor markets, compensation, and pensions with both a US and an international focus. She received the BA in Economics from Harvard University and the MS and Ph.D. in Economics from the University of Wisconsin-Madison.

Mark J. Warshawsky is Director of Retirement Research at Towers Watson, a global human capital consulting firm. He conducts and oversees research on employer-sponsored retirement programs and policies, social security, financial planning, and health care financing. He is a co-author of the Fundamentals of Private Pensions, Ninth Edition, 2009, published by Oxford University Press, and of Retirement Income: Risks and Strategies, forthcoming, MIT Press. Previously he held senior-level economic research positions at the Internal Revenue Service, the Federal Reserve Board in Washington, DC, and TIAA-CREF, where he established the Paul A. Samuelson Prize. Dr. Warshawsky received a Ph.D. in Economics from Harvard University and a BA with Highest Distinction from Northwestern University.

1. Retirement Security and the Financial Economic Crisis: An Overview, Raimond Maurer, Olivia S. Mitchell, and Mark J. Warshawsky
Part I. Rethinking Retirement in the New Economic Era
2. Changing Retirement Behavior in the Wake of the Financial Crisis, Julia Coronado and Karen Dynan
3. Potential Impacts of the Great Recession on Future Retirement Incomes, Barbara A. Butrica, Richard W. Johnson, and Karen E. Smith
4. Effects of the Economic Crisis on the Older Population: How Expectations, Consumption, Bequests, and Retirement by the Older Population Responded to Market Shocks, Michael Hurd and Susann Rohwedder
5. Retirement Behavior and the Global Financial Crisis, Jason J. Fichtner, John W.R. Phillips, and Barbara A. Smith
Part II. Rethinking the Resilience of Defined Contribution Plans
6. Trading in 401(k) Plans During the Financial Crisis, Ning Tang, Olivia S. Mitchell, and Stephen P. Utkus
7. Lifecycle Impacts of the Financial Crisis on Optimal Consumption-Portfolio Choices and Labor Supply, Jingjing Chai, Raimond Maurer, Olivia S. Mitchell, and Ralph Rogalla
8. A Stress Test for the Private Employer Defined Contribution System, David Wray
Part III. How Defined Benefit Plans Handled the Financial Crisis
9. Corporate Defined Benefit Pension Plans and the Financial Crisis: Impact and Sponsor and Government Reactions, Mark J. Warshawsky
10. Multiemployer Pension Plans in the Financial Crisis, Judith F. Mazo and Eli Greenblum
11. Adopting Hybrid Pension Plans: Effects of Economic Crisis and Regulatory Reform, Robert L. Clark, Alan Glickstein, and Tomeka Hill
12. Collective Pensions and the Global Financial Crisis: The Case of the Netherlands, Lans Bovenberg and Theo Nijman
13. How Have Public Sector Pensions Responded to the Financial Crisis?, Andrew G. Biggs