How Persistent Low Returns Will Shape Saving and Retirement

Financial market developments over the past decade have undermined what was once thought to be conventional wisdom about saving, investment, and retirement spending. How Persistent Low Returns Will Shape Saving and Retirement explores how the weak capital market performance predicted for the next several years will shape pension saving, investment, and decumulation plans. Academics, policymakers, and industry leaders debate alternative strategies to cope with these challenges globally, as economic growth remains slow and low returns become the 'new normal.'

This volume includes contributions from plan sponsors, benefit specialists, actuaries, academics, regulators, and others working to design resilient pensions for the next decades. Together, they identify several new tools for retirement savers and pension managers.

Olivia S. Mitchell is the International Foundation of Employee Benefit Plans Professor, as well as Professor of Insurance/Risk Management and Business Economics/Policy; Executive Director of the Pension Research Council; and Director of the Boettner Center on Pensions and Retirement Research; all at the Wharton School of the University of Pennsylvania. Concurrently Dr. Mitchell serves as a Research Associate at the NBER; Independent Director on the Wells Fargo Fund Boards; Co-Investigator for the Health and Retirement Study at the University of Michigan; Member of the Executive Board for the Michigan Retirement Research Center; and Senior Scholar at the Singapore Management University. She also advises the Centre for Pensions and Superannuation UNSW and is Faculty Affiliate of the Wharton Public Policy Initiative. She received her MA and PhD degrees in Economics from the University of Wisconsin-Madison, and her BA in Economics from Harvard University.

Robert Clark is Stephen Zelnak Professor of Economics and Professor of Management, Innovation and Entrepreneurship in the Poole College of Management, North Carolina State University. He is also Research Associate at the National Bureau of Economic Research and a member of the Advisory Board of the Pension Research Council. His research examines retirement decisions, the choice between defined benefit and defined contribution plans, the impact of pension conversions to defined contribution and cash balance plans, the role of information and communications on 401(k) contributions, and government regulation of pensions. He has also evaluated employer-provided financial literacy and retirement planning programs and how these plans affect worker decisions, as well as state and local pensions and retiree health plans. He earned his M.S. and PhD from Duke University, and his BA from Millsaps College in economics.

Raimond Maurer is the Chair of Investment, Portfolio Management, and Pension Finance at the Finance Department of the Goethe University of Frankfurt. He is also Dean of the Faculty of Economics and Business Administration. His research focuses on asset management, life-time portfolio choice, real estate, and pension finance. Previously he visited the Wharton School as a Metzler Vising Professor, and he serves in several professional capacities including the Union Real Estate Investment group, the Society of Actuaries (academic chairman of AFIR), the Association of Certified International Investment Analysts (academic director and member of the International Examination Committee). He earned his Habilitation, PhD, and Diploma in business administration from Mannheim University, and he received an honorary doctorate from the State University of Finance and Economics of St. Petersburg.

1. Introduction and Overview, Robert Clark, Raimond Maurer, and Olivia S. Mitchell
Part I: Origins and Consequences of a Persistent Low Return Environment
2. Politics, Independence, and Retirees: Long-term Low Interest Rates at the US Federal Reserve, Peter Conti-Brown
3. Low Returns and Optimal Retirement Savings, David Blanchett, Michael Finke, and Wade Pfau
4. Getting More from Less in Defined Benefit Plans: Three Levers for a Low-Return World, Daniel B. Berkowitz, Andrew S. Clarke, Kevin J. DiCiurcio, Kimberly A. Stockton, and Daniel W. Wallick
5. Investing for Retirement in a Low Returns Environment: Making the Right Decisions to Make the Money Last, Alistair Byrne and Catherine Reilly
6. Intelligent Risk Taking: How to Secure Retirement in a Low Expected Return World, Antti Ilmanen and Matthew Rauseo
Part II: Whither Retirement Strategies?
7. Challenges and Opportunities for Living and Working Longer, Kevin E. Cahill and Joseph F. Quinn
8. How Persistent Low Expected Returns Alter Optimal Life Cycle Saving, Investment, and Retirement Behavior, Vanya Horneff, Raimond Maurer, and Olivia S. Mitchell
9. Retirement Saving and Decumulation in a Persistent Low-Return Environment, Jason J. Fichtner and Jason S. Seligman
Part III: New Designs for Pension Plan Sponsors
10. Helping Employers Become Age-Ready, Yvonne Sonsino
11. State Sponsored Retirement Savings Plans: New Approaches to Boost Retirement Plan Coverage, William G. Gale and David C. John
12. Global Developments in Employee Benefits, Jonathan Gardner, Natalia Garabato, and Steve Nyce