Pension research collaboration
Key researchers
Project background and aims
The Monash Centre for Financial Studies and the CFA Institute have started a collaborative research project on pension and sustainability. The aim of this collaboration is to produce new research exploring the relationship between the different design features of the pension systems in the developed and developing countries, and the pension expenditure, debt burden and overall sustainability of the systems.
The collaboration is expected to be for one year comprising multiple research reports.
Report 1: How could pension system design features help lower public pension spending?
Description: Public pensions pose major challenges for governments, with costs rising due to demographic and economic trends. This study analyzes policy implications and recommends reforms to boost private retirement savings.
Report 2: The Performance of the 60/40 Portfolio: A Historical Perspective
This is the second project funded by the CFAI, where Nga Pham, Bei Cui, and Ummul Ruthbah analyse the performance of the 60/40 portfolio strategy over the past century, providing insights into its historical effectiveness and relevance in today's investment landscape. This study contributes to ongoing discussions about the viability of traditional asset allocation strategies in a changing financial environment.
Report 3: The Future of the 60/40 Allocation: Modelling the performance of the 60/40 portfolio in retirement
This third report funded by the CFAI undertakes a thorough examination of the 60/40 investment strategy’s ability to sustain retirees through their post-working years, with a focus on the diverse economic environments of Australia and the United States. Employing advanced Monte Carlo simulations, we dissect the performance of this portfolio, across a span of 25 years of retirement. Our findings reveal that the effectiveness of the 60/40 portfolio is not universally guaranteed but varies significantly based on several factors, such as the size of the retiree’s initial savings. The ambition for a comfortable lifestyle emerges as a challenging goal, often leading to the depletion of funds before the end of the retirement period, underscoring the need for substantial initial investments or additional income sources.