Playing Above the Breaks...

In his attempt to gain an understanding of true leadership traits, Eich assembled a cadre of well-known successful leaders from academe, law enforcement, journalism, foreign affairs, and athletics. What he discovered was a common thread between them: a “true” leader recognizes his or her own fallibility, resists blaming others for unsuccessful choices, and seeks the continuous feedback of an adroitly-assembled team

The importance of defined-benefit occupational pension schemes in selected OECD countries

This paper discusses the role which (funded) defined benefit private sector occupational pension schemes play in national pensions in a sub-group of OECD countries. The paper shows that in the majority of countries under consideration statutory (state) pension schemes are the main if not only source of income in retirement for most people, with occupational pensions only playing at most a minor role. In several countries private sector occupational pension schemes do play an important role in providing pensioner incomes though. In these countries there has generally been a shift from DB to DC pensions, with the risks associated with pensions moved from businesses to individuals. Australia, for example, shifted from DB to compulsory DC pensions a generation ago, leaving only a few major businesses with any sizeable DB pension liabilities now. The US has undergone a similar shift though there is no compulsion. In the UK the economic and financial crisis has accelerated the closure of existing DB pension schemes and dealing with the legacy of DB pension liabilities is becoming a major issue. The picture is similar in the Netherlands and Ireland. The paper also shows the diverging DB arrangements in the private and public sectors, with governments in a number of countries continuing to offer (unfunded) DB pension promises when they have become less popular in the private sector. --Defined benefit pensions,Pension systems,State pensions,Pension funds,Pension liabilities

Who will pay? Inter-generational transfers and public sector pensions

This paper analyses the different channels through which particular generations within one society can end up subsidising other generations through the functioning of the welfare state. The welfare state, which is organised and funded by “society” through taxation, plays an important part in almost all countries, often providing services such as education and health care or transfers such as state pensions. Whether a generation receives a net subsidy from another generation (or other generations) can only be determined at the end of their life cycle and not at any particular point in time during their lives. The paper therefore focuses on the flows between the welfare state and generations over their whole lifespan, from birth to childhood, to working life to old age and eventual death. The paper argues that depending on the underlying cause of a potential inter-generational imbalance, the policy response might very well differ. Tax smoothing (and letting debt fluctuate as a buffer) is an appropriate response to varying cohort sizes (the baby boomer example). However, tax smoothing does not help with more structural changes such as the increase in longevity across successive generations. Increasing retirement ages in line with increases in longevity would be one appropriate response as would be making entitlements in old age less generous. In reality many developments take place at the same time so that a policy mix will be required. Last but not least the paper shows that the issue of funded versus unfunded public sector pensions is not as clear cut as some might believe it to be. Perhaps counter intuitively, having unfunded public sector pensions might actually be inter-generationally fairer than having funded pensions. This will depend on the circumstances though. --Inter-generational fairness,Labour market,Public finances,Public sector pensions,Government policy

The financial and economic crisis and pension systems: International experiences

There has been much discussion in the British general and specialised media over the last year on the adverse consequences of the economic and financial crisis on the British pension system. It should come as no surprise that the crisis has also adversely affected pension systems in most other countries too. This paper contributes to the current debate on pensions in the UK by discussing how pension systems outside the UK have been affected by the economic and financial crisis, and what governments have done to deal with the emerging issues. The paper starts by discussing what theory tells us about the likely impact of this type of crisis on different types of pension systems. While the impact should be more long term in the case of pay-as-you-go state pensions and defined-benefit occupational pensions, theory would suggest that the effects will be felt more immediately in the case of defined-contribution pension schemes or private savings. The paper then goes on to present a number of key developments and policy actions (if any) that have taken place in a select number of countries in the realm of pensions since the onset of the crisis in the second half of 2007. These countries have been chosen as they are representative for a large number of countries, from Chile with its very high dependency on private pensions to Germany, where unfunded social security pensions remain by far the most important source of retirement income. The paper finds that the real world experiences are in line with what could be expected theoretically and argues that regardless of whether a country relies more heavily on an unfunded pay-as-you-go state pension system or funded private pensions (whether defined benefit or defined contribution) the crisis has had an adverse effect everywhere. Existing systems will have to be refined or restructured more fundamentally, with the exact response likely to vary from country to country reflecting society’s interpretation of “inter-generational fairness”. Annex A provides information on the respective ageing trends in these countries, while Annex B discusses the respective arrangements set up to protect current and future pensioners’ entitlements if and when a pension scheme’s corporate sponsor becomes insolvent. --Public sector,Private sector,Pension systems,International comparisons,Financial markets,Economic crisis,Defined contributions,Defined benefit

Memo to CEO: Five Easy Ways to Invigorate the C-Suite

As business is inherently stressful, especially for those in leadership positions, maintaining a restorative workplace environment is essential to promoting sound mental health and achieving sustained competitive excellence. Eich stresses that chief executives must continuously monitor their teams for ennui and malaise. As the previous article describes the impact of spirituality in the workplace, Eich notes the importance of creating an environment marked by the arts and measured forms of relaxation — whether in the form of comforting music, gardens, artwork, and/or time off from work. A reflective, calming work environment promotes a healthy psyche which, in turn, fosters creativity and loyalty