Assessing the Labour, Financial and Demographic Risks to Retirement Income from Defined-Contribution Pensions

Pablo Antolin () and Stéphanie Payet

OECD Journal: Financial Market Trends, 2011, vol. 2010, issue 2, 189-217

Abstract: This article examines the impact of labour, financial and demographic risks on retirement income from DC pension plans, with a special emphasis on labour-market risk. It uses a stochastic model that incorporates uncertainty about returns on investment, inflation, discount rates, life expectancy, employment prospects and real wages. The analysis herein highlights that labour-market risk, as well as uncertainty about returns on investment and inflation, have the largest impact on retirement income. The results suggest that default life-cycle investment strategies that reduce exposure to risky assets in the last decade before retirement are quite helpful in reducing the risk of sharp reductions in retirement income, in particular when a negative shock to equity markets occurs in the years before retiring. However, life-cycle strategies fail to address issues of retirement income adequacy or smooth out the volatility in retirement income from DC pension plans.

Date: 2011
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://doi.org/10.1787/fmt-2010-5kggc0z23fr5 (text/html)
Full text available to READ online. PDF download available to OECD iLibrary subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oec:dafkad:5kggc0z23fr5

Access Statistics for this article

More articles in OECD Journal: Financial Market Trends from OECD Publishing Contact information at EDIRC.
Bibliographic data for series maintained by ().