IDEAS home Printed from https://ideas.repec.org/a/gam/jjrfmx/v15y2022i5p207-d806266.html
   My bibliography  Save this article

Vague Pension Future: Empirical Evidence from the Israeli Radical Privatized Market

Author

Listed:
  • Ishay Wolf

    (Faculty of Business Administration, Ono Academic College, Kiryat Ono P.O. Box 759, Israel)

  • Smadar Levi

    (Faculty of Business Administration, Ono Academic College, Kiryat Ono P.O. Box 759, Israel)

Abstract

We examine the future benefits of the Israeli privatized pension system, which is considered as a model of transition to funded pension systems worldwide. This research is based on an extensive database obtained from one of the largest traditional private funds in the market. The results paint a concerning picture regarding the adequacy of benefits and quality of life in old age. Israel’s radical privatized pension model signals a warning to other nations. We show that, even with high returns, most individuals cannot handle the magnitude of financial and labor risks accumulated during their career and retirement. We recommend more balanced government intervention as well as the use of risk-sharing mechanisms such as providing minimum pension guarantee and strengthening the unfunded social security pillar.

Suggested Citation

  • Ishay Wolf & Smadar Levi, 2022. "Vague Pension Future: Empirical Evidence from the Israeli Radical Privatized Market," JRFM, MDPI, vol. 15(5), pages 1-15, April.
    • Handle: RePEc:gam:jjrfmx:v:15:y:2022:i:5:p:207-:d:806266
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/1911-8074/15/5/207/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/1911-8074/15/5/207/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Jan Bonenkamp & Lex Meijdam & Eduard Ponds & Ed Westerhout, 2017. "Ageing-driven pension reforms," Journal of Population Economics, Springer;European Society for Population Economics, vol. 30(3), pages 953-976, July.
    2. John Burnett & Kevin Davis & Carsten Murawski & Roger Wilkins & Nicholas Wilkinson, 2018. "Measuring the Adequacy of Retirement Savings," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 64(4), pages 900-927, December.
    3. Larsen, Linda Sandris & Nielsson, Ulf & Rangvid, Jesper, 2022. "Gender and choice of pension product," Finance Research Letters, Elsevier, vol. 47(PB).
    4. Chen, Damiaan H. J. & Beetsma, Roel M. W. J. & Ponds, Eduard H. M. & Romp, Ward E., 2016. "Intergenerational risk-sharing through funded pensions and public debt," Journal of Pension Economics and Finance, Cambridge University Press, vol. 15(2), pages 127-159, April.
    5. David Amaglobeli & Hua Chai & Ms. Era Dabla-Norris & Mr. Kamil Dybczak & Mauricio Soto & Alexander F. Tieman, 2019. "The Future of Saving: The Role of Pension System Design in an Aging World," IMF Staff Discussion Notes 2019/001, International Monetary Fund.
    6. Pierre Devolder & Susanna Levantesi & Massimiliano Menzietti, 2021. "Automatic balance mechanisms for notional defined contribution pension systems guaranteeing social adequacy and financial sustainability: an application to the Italian pension system," Annals of Operations Research, Springer, vol. 299(1), pages 765-795, April.
    7. Knoef, Marike & Been, Jim & Alessie, Rob & Caminada, Koen & Goudswaard, Kees & Kalwij, Adriaan, 2016. "Measuring retirement savings adequacy: developing a multi-pillar approach in the Netherlands," Journal of Pension Economics and Finance, Cambridge University Press, vol. 15(1), pages 55-89, January.
    8. David Amaglobeli & Hua Chai & Era Dabla-Norris & Kamil Dybczak & Mauricio Soto & Alexander F. Tieman, 2019. "The Future of Saving; The Role of Pension System Design in an Aging World," IMF Staff Discussion Notes Staff Discussion Note 19/, International Monetary Fund.
    9. Claude Giorno & Jacques Adda, 2016. "Improving the pension system and the welfare of retirees in Israel," OECD Economics Department Working Papers 1288, OECD Publishing.
    10. Anonymous, 2009. "Abstract of the discussion," British Actuarial Journal, Cambridge University Press, vol. 15(1), pages 202-217, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mr. Cian Allen & Camila Casas & Mr. Giovanni Ganelli & Luciana Juvenal & Mr. Daniel Leigh & Mr. Pau Rabanal & Cyril Rebillard & Jair Rodriguez & João Tovar Jalles, 2023. "2022 Update of the External Balance Assessment Methodology," IMF Working Papers 2023/047, International Monetary Fund.
    2. Kristina V. Shvandar & Anastasia A. Anisimova, 2021. "Approaches to Reforming Pension Systems in the World and Recommendations for Russia," Finansovyj žhurnal — Financial Journal, Financial Research Institute, Moscow 125375, Russia, issue 1, pages 125-135, February.
    3. Mr. Luis M. Cubeddu & Signe Krogstrup & Gustavo Adler & Mr. Pau Rabanal & Mai Dao & Mrs. Swarnali A Hannan & Luciana Juvenal & Ms. Carolina Osorio-Buitron & Cyril Rebillard & Mr. Daniel Garcia-Macia &, 2019. "The External Balance Assessment Methodology: 2018 Update," IMF Working Papers 2019/065, International Monetary Fund.
    4. Sika Peter & Vidová Jarmila, 2021. "Reality and expectations of old-age pension savings in the pension system of the Slovak Republic," Review of Economic Perspectives, Sciendo, vol. 21(4), pages 411-436, December.
    5. Olfa Frini, 2021. "The relationship ageing of the population and saving in an unemployment context: Empirical evidence using an autoregressive distributed lag bounds testing approach," Australian Economic Papers, Wiley Blackwell, vol. 60(1), pages 98-121, March.
    6. Ishay Wolf & Lorena Caridad Lopez del Rio, 2021. "Benefit Adequacy in Funded Pension Systems: Micro-Simulation of the Israeli Pension Scheme," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(2), pages 143-164.
    7. Ishay Wolf, 2021. "Political Stress and the Sustainability of Funded Pension Schemes: Introduction of a Financial Theory," JRFM, MDPI, vol. 14(11), pages 1-12, November.
    8. Oliwia Komada & Krzysztof Makarski & Joanna Tyrowicz, 2017. "Welfare effects of fiscal policy in reforming the pension system," GRAPE Working Papers 11, GRAPE Group for Research in Applied Economics.
    9. Armstrong, Angus & Davis, Philip & Ebell, Monique, 2015. "An economic analysis of pension tax proposals," LSE Research Online Documents on Economics 86276, London School of Economics and Political Science, LSE Library.
    10. Melsa Ararat & George Dallas, 2011. "Corporate Governance in Emerging Markets : Why It Matters to Investors—and What They Can Do About It," World Bank Publications - Reports 11071, The World Bank Group.
    11. Ehlers, Tim, 2011. "University graduation dependent on family's wealth, ability and social status," University of Göttingen Working Papers in Economics 120, University of Goettingen, Department of Economics.
    12. Alserda, Gosse A.G. & Dellaert, Benedict G.C. & Swinkels, Laurens & van der Lecq, Fieke S.G., 2019. "Individual pension risk preference elicitation and collective asset allocation with heterogeneity," Journal of Banking & Finance, Elsevier, vol. 101(C), pages 206-225.
    13. Ralph Stevens & Jennifer Alonso Garcia & Hazel Bateman & Arthur van Soest & Johan Bonekamp, 2022. "Saving preferences after retirement," ULB Institutional Repository 2013/342267, ULB -- Universite Libre de Bruxelles.
    14. Kelly Ruth, 2010. "EU and U.S. Non-Reciprocal Preferences: Maintaining the Acquis," The Law and Development Review, De Gruyter, vol. 3(1), pages 1-39, April.
    15. Andrei Shleifer & Robert Vishny, 2011. "Fire Sales in Finance and Macroeconomics," Journal of Economic Perspectives, American Economic Association, vol. 25(1), pages 29-48, Winter.
    16. Oliwia Komada & Krzysztof Makarski & Joanna Tyrowicz, 2021. "Progressing towards efficiency: the role for labor tax progression in reforming social security," GRAPE Working Papers 57, GRAPE Group for Research in Applied Economics.
    17. van der Vaart, J & Groneck, M & van Ooijen, R, 2024. "Health Inequalities and the Progressivity of Old-Age Social Insurance Programs," Health, Econometrics and Data Group (HEDG) Working Papers 24/20, HEDG, c/o Department of Economics, University of York.
    18. repec:idb:brikps:365 is not listed on IDEAS
    19. Menon, Martina & Pendakur, Krishna & Perali, Federico, 2012. "On the expenditure-dependence of children’s resource shares," Economics Letters, Elsevier, vol. 117(3), pages 739-742.
    20. Visser, Mark & Fasang, Anette Eva, 2018. "Educational assortative mating and couples’ linked late-life employment trajectories," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 37, pages 79-90.
    21. D. Boccanfuso & L. Savard, 2012. "A Segmented Labour Supply Model Estimation for the Construction of a CGE Microsimulation Model: An Application to the Philippines," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 6(2), pages 211-234, May.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jjrfmx:v:15:y:2022:i:5:p:207-:d:806266. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.