Charles H. Lundquist College of Business
University of Oregon
Eugene, OR 97403
NBER Working Papers and Publications
|November 2012||The 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...
- Chalmers, John, Woodrow Johnson, and Jonathan Reuter, 2014, “The Effect of Pension Design on Employer Costs and Employee Retirement Choices: Evidence from Oregon,” Journal of Public Economics 116 (August): 17-34. citation courtesy of
- The Effect of Pension Design on Employer Costs and Employee Retirement Choices: Evidence from Oregon, John Chalmers, Woodrow T. Johnson, Jonathan Reuter. in Retirement Benefits for State and Local Employees: Designing Pension Plans for the Twenty-First Century, Clark, Rauh, and Duggan. 2014
|August 2012||The Effect of Pension Design on Employer Costs and Employee Retirement Choices: 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, Joshua Rauh, and Mark Duggan, editors
|June 2012||Is Conflicted Investment Advice Better than No Advice?|
with Jonathan Reuter: w18158
The answer depends on how broker clients would have invested in the absence of broker recommendations. To identify counterfactual retirement portfolios, we exploit time-series variation in access to brokers by new plan participants. When brokers are available, they are chosen by new participants who value recommendations on asset allocation and fund selection because they are less financially experienced. When brokers are no longer available, demand for target-date funds (TDFs) increases differentially among participants with the highest predicted demand for brokers. Broker client portfolios earn significantly lower risk-adjusted returns and Sharpe ratios than matched portfolios based on TDFs—due in part to broker fees that average 0.90% per year—but offer similar levels of risk. More gene...
|December 2009||How 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...
Published: John Chalmers and Jonathan Reuter, "How Do Retirees Value Life Annuities? Evidence from Public Employees", Review of Financial Studies, August 2012, Vol. 25, No. 8, 2601-2634. citation courtesy of