NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

NBER Publications by John Chalmers

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with Jonathan Reuter
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with Woodrow T. Johnson, Jonathan Reuter
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with Jonathan Reuter
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Working Papers and Chapters

November 2012The Effect of Pension Design on Employer Costs and Employee Retirement Choices: Evidence from Oregon
with Woodrow T. Johnson, Jonathan Reuter: w18517
Oregon’s Public Employees Retirement System (PERS) is a rich setting in which to study the effect of pension design on employer costs and employee retirement-timing decisions. PERS pays retirees the maximum benefit calculated using three formulas that can be characterized as defined benefit (DB), defined contribution (DC), and a combination of DB and DC. From the employer’s perspective, we show that this “maximum benefit” calculation is costly. Average ex post retirement benefits are 54% higher than they if had been calculated using only the DB formula. Monte Carlo simulations verify that the higher cost could have been predicted at the start of our sample period. From the employee’s perspective, we show that plan design distorts the retirement-timing decision: employees receiving DC benef...
August 2012Pension Costs and Retirement Decisions in Plans that Combine DB and DC Elements: Evidence from Oregon
with Woodrow T. Johnson, Jonathan Reuter
in Retirement Benefits for State and Local Employees: Designing Pension Plans for the Twenty-First Century, Robert Clark and Joshua Rauh, organizers
June 2012What is the Impact of Financial Advisors on Retirement Portfolio Choices and Outcomes?
with Jonathan Reuter: w18158
Within the Oregon University System's defined contribution retirement plan, one investment provider offers access to face-to-face financial advice through its network of brokers. We find that younger, less highly educated, and less highly paid employees are more likely to choose this provider. To benchmark the portfolios of broker clients, we use the actual portfolios of self-directed investors and counterfactual portfolios constructed using target-date funds, a popular default investment. Broker clients allocate contributions across a larger number of investments than self-directed investors, and they are less likely to remain fully invested in the default option. However, broker clients' portfolios are significantly riskier than self-directed investors' portfolios, and they underperf...
December 2009How Do Retirees Value Life Annuities? Evidence from Public Employees
with Jonathan Reuter: w15608
Economists have long been puzzled by the low demand for life annuities. To shed new light on this puzzle, we study payout choices in the Oregon Public Employees Retirement System, where each retiree must choose between a lump sum and a life annuity. Notably, the average life annuity we study is better than actuarially fair when compared to the lump sum and 85% of retirees choose the life annuity. Whether and how retirees respond to variation in the value of life annuity payments depends crucially on the source of variation. We find strong evidence that demand responds to variation in retiree characteristics. In contrast, we find little evidence that demand responds to plausibly exogenous variation in annuity pricing, which is economically meaningful but less salient. Finally, we find...

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