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Growing Old

Paying for Retirement and Institutional Money Management after the Financial Crisis

edited by Yasuyuki Fuchita, Richard J. Herring, and Robert E. Litan

Publication Year: 2011

While the immediate dangers from the recent financial crisis have abated —much of the financial system has returned to profitability and the economy is growing, albeit slowly —the damage to the economy will linger for years. Among the many impacts is the problem that may be most acute in the United States: how state and local governments and private companies will honor their obligations under defined benefit (DB) pension plans. Institutional investors also confront new difficulties in the low-interest-rate environment that has prevailed since the onset of the crisis. East Asian economies, namely in Japan, Korea, and China, also face pension issues as their populations age.

In Growing Old, experts from academia and the private sector consider the hard questions regarding the future of pension plans and institutional money management, both in the United States and in Asia. This volume is the latest collaboration between the Brookings Institution and the Nomura Institute of Capital Markets Research on issues confronting the financial sector of common interest to audiences in the United States and Japan.

Contributors: Olivia S. Mitchell (Wharton School, University of Pennsylvania), Akiko Nomura (Nomura Institute of Capital Markets Research), Robert Novy-Marx (Simon Graduate School of Business, University of Rochester), Betsy Palmer (MFS Investment Management), Robert Pozen (Harvard Business School), Joshua Rauh (Kellogg School of Management, Northwestern University), Natalie Shapiro (MFS Investment Management)

Published by: Brookings Institution Press

Front Cover

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Title Page, Copyright

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pp. i-iv

Table of Contents

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pp. v-vi

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Preface

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pp. vii-viii

...practitioners in the United States, Japan, and elsewhere. Initially led by Brookings senior fellow Robert E. Litan and Yasuyuki Fuchita, senior managing director of Nomura Institute of Capital Markets Research, the collaboration was joined in 2008 by Richard J. Herring of the Financial Institutions...

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Introduction

Yasuyuki Fuchita, Richard J. Herring, and Robert E. Litan

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pp. 1-10

...them; poor risk management by financial institutions; serious failures of oversight by state and federal financial regulators; and far too much leverage in too many financial institutions and households. While the immediate dangers from the crisis have abated—the financial system has returned to profitability and the economy is growing, albeit slowly—the damage...

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Trends in Pension System Reform in East Asia: Japan, Korea, and China

Akiko Nomura

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pp. 11-46

...be briefly summarized as a shift from public to private pensions, an increase in the level of prefunding, and a shift from defined benefit plans to defined contribution plans, all aimed at improving both the adequacy and sustainability of pensions. The pension reforms under way in three East Asian countries...

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The Crisis in Local Government Pensions in the United States

Robert Novy-Marx and Joshua Rauh

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pp. 47-74

...statement 25, which stipulates that benefit promises are to be discounted at an assumed return on pension plan assets. That assumed return determines how the future stream of cash benefits that the state or local government...

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Managing Risks in Defined Contribution Plans: What Does the Future Hold?

Olivia S. Mitchell

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pp. 75-94

...participants to take an active role in managing them to achieve their ultimate purpose, namely, meeting participants’ consumption needs in retirement. And, noting that participants sometimes have difficulty managing their retirement plans effectively, some critics have charged that DC plans are not up to the...

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Asset Allocation by Institutional Investors after the Recent Financial Crisis

Robert C. Pozen, Betsy Palmer, and Natalie Shapiro

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pp. 95-142

...portfolio of U.S. stocks from 1991 to 1999, it would have recorded excellent performance regardless of the individual stocks selected. Conversely, that institution would have recorded relatively poor performance from 2000 to 2008 if it held a diversified portfolio of U.S. stocks regardless of the individual stocks...

Contributors

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pp. 143-144

Index

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pp. 145-152

Back Cover

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E-ISBN-13: 9780815721543
E-ISBN-10: 0815721544

Page Count: 151
Publication Year: 2011