There has been much ado made about the coming retirement of the large Baby Boom generation and the potential drain on the U.S. economy. But according to recent research, many of these older Americans may not retire exactly as planned, and their decision to work well into their late sixties and beyond will have many positive, and a few negative, consequences for the job market. Why Do Pension Problems Proliferate?
Social Security may be fading out of the news now that President George W. Bush’s proposal to change its structure has stalled in Congress, but don’t expect pension problems to vanish from the news altogether. Finance and accounting professors at Emory University’s Goizueta Business School say that the U.S. also faces two other pension funding crises, each potentially more serious than un-reformed Social Security. Emory scholars also note that while not facing a fiscal crisis, 401(k)s also have some significant shortcomings in their management that often make them riskier investment vehicles for individuals than they need to be. Catastrophe Modeling: A New Approach to Managing Risk
Before Hurricane Hugo swept through parts of the southern U.S. in 1989, the insurance industry had never suffered a loss of more than $1 billion from a single disaster. Since then, numerous catastrophes have exceeded that figure, even as development in danger zones continues to increase. It's a trend that emphasizes, as never before, the need to manage risk on both a national and a global scale. "People today are asking the question, 'How do we scientifically evaluate catastrophic risk?'" says Wharton's Howard Kunreuther, co-author -- along with Patricia Grossi -- of Catastrophe Modeling: A New Approach to Managing Risk. The book analyzes the role of catastrophe modeling in developing risk management strategies to help reduce losses from future disasters, ranging from floods and hurricanes to environmental damage and terrorism. Straight Talk on How to Resuscitate An Ailing Company
Gary Sutton, a 20-year turnaround specialist, declares that he can rescue a failing company in less than a year. Straightforward and honest, Sutton provides a how-to manual on getting ailing companies back on the road to profits and longevity in his book, The Six Month Fix. Is the Penchant for Pensions Over?
After three years of a down stock market and a rocky economy, retirement has become a distant goal for many people. The trend away from traditional pension plans has added even more uncertainty for older workers. Faculty at Emory University’s Goizueta Business School and industry experts discuss the impact of the changing retirement rules on a generation of workers. A “Perfect Storm” of Circumstances Batters Corporate Pension Plans
In 1985, the Financial Accounting Standards Board (FASB) looked at defined-benefit pension accounting issues and noted: “Measuring cost and reporting liabilities resulting from defined benefit pension plans have been sources of accounting controversy for many years.” Now, nearly two decades later, they’re still controversial as companies like General Motors Corp., IBM and others rack up billions of dollars in under-funded defined benefit pension plan liabilities. Some Wharton faculty and other experts are asking whether FASB rules as well as the Internal Revenue Code itself may have played a significant part in the strife. How Well Do 401(k) Plans Work, and Who Benefits Most From Them?
When Enron collapsed a year ago, thousands of employees’ retirement savings were wiped out, sparking quick calls for reform of 401(k) plans. Some changes were put in place earlier this year, others are still being debated in Congress. But now that the smoke of corporate scandals has begun to clear, do problems with 401(k)s still appear as bad as they did last winter? Should the system be left alone, merely tweaked, or overhauled? How Wealthy Nations Can Avoid a Looming Retirement Crisis
The rapid aging of the world’s industrialized nations poses problems for consumer and capital markets, including the risk that individual and government retirement plans will come up short over the next two decades. But the retirement boom will also have implications for the developing world. The global aging problem and the prospect for globally-based solutions were outlined several weeks ago during a conference sponsored by Wharton’s Pension Research Council and The Financial Institutions Center. How Design of Pension Plans Influences Employee Investments
With the collapse of Enron, lawmakers, regulators, financial advisors and working people are taking a hard look at 401(k) plans, which employees in many U.S. companies use to save for retirement. In a recent study entitled “Defined Contribution Pensions: Plan Rules, Participant Choices, and the Path of Least Resistance,” Wharton finance professor Andrew Metrick and three co-authors analyze the impact of a plan’s design on the level of employee participation, the percentage of income employees contribute and the investment choices they make. What Will the Bush Bailout Plan Mean for Insurers?
One of the most vexing business issues to emerge from the rubble of the World Trade Center’s tragic destruction is how the insurance industry will continue to write policies that cover terrorism. On October 15 the Bush administration announced a series of proposals to bail out the industry. Will this plan address the insurance industry’s problems? Professors at Emory University and its Goizueta Business School welcome the plan, but they caution that a hastily concocted remedy could have powerful side effects of its own.