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Impact of different life-cycle saving strategies and unemployment on individual savings in defined contribution pension scheme in Slovakia
Title Impact of different life-cycle saving strategies and unemployment on individual savings in defined contribution pension scheme in Slovakia Author info Michal Mešťan, Ivan Králik ... [et al.] Author Mešťan Michal 1991- (30%) UMBEF04 - Katedra financií a účtovníctva
Co-authors Králik Ivan 1992- (30%) UMBEF15 - Katedra verejnej ekonomiky a regionálneho rozvoja
Šafár Leoš (20%)
Šebo Ján 1978- (20%) UMBEF15 - Katedra verejnej ekonomiky a regionálneho rozvoja
Source document E+M Ekonomie a Management. Roč. 24, č. 3 (2021), s. 128-148. - Liberec : Technická univerzita v Liberci, 2021 Keywords dôchodkové sporenie - pension savings - retirement savings nezamestnanosť - unemployment life cycles Form. Descr. články - journal articles Language English Country Czech Republic Annotation Searching for the optimal saving strategy is often tied with the life-cycle strategies where only the age of a saver is considered for setting the allocation profile between equities and bonds. Our article contributes to the debate by looking at the performance and adequacy risks arising from applying age-based saving strategies for savers in funded pension schemes. As many studies have proven the shift of the risk onto savers in defined contribution pension schemes under various saving strategies, we contribute to the debate by providing simulations of expected accumulated savings via funded pension scheme under the various life-cycle income profiles and existence of unemployment risk. Using the resampling simulation technique, we compare the fixed and age-based strategies of three different agents with various life-cycle income paths and different unemployment risk. We compare the expected amount of savings and calculate relative indicators comparing the expected monthly benefits, income replacement rate. We look closely on the impact of unemployment on the value of savings and calculate the unemployment factor explaining the value of savings lost due to the periods of unemployment. By combining life-cycle income functions of individuals with different education level and unemployment risk, we show that decisions of implementing low risk saving strategies are suboptimal and lead to a substantial decrease in replacement ratios not only for higher income cohorts but especially for the lowest ones. At the same time, we prove that employing low risk saving strategy leads to the increase of adequacy risk especially driven by the unemployment risk that is higher for lower education individuals. We conclude that age-based life-cycle saving strategies, where the remaining saving horizon is the only factor defining the allocation profile is not the optimal saving strategy and other factors should be considered as well when searching for optimal saving strategy URL Link na zdrojový dokument Public work category ADM No. of Archival Copy 50725 Repercussion category SLEZÁKOVÁ, Andrea - VIŠŇOVSKÝ, Martin. De lege ferenda considerations on potential institutes increasing participation in supplementary pension savings. In Horizons of law in business and finance : conference proceedings 15th international scientific conference „Law in business of selected member states of the European Union", 25th-27th October 2023, Prague [online]. 1. vyd. Bucharest : International academic publisher, 2023, pp. 200-216 [cit. 2024-07-09]. ISBN 978-606-95862-2-8. Dostupné na: http://www.adjuris.ro/books/hlbf/Table%20of%20Contents.pdf
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