English, Article, Journal or magazine article edition: Pension Benefit Insurance and Pension Plan Portfolio Choice Thomas Crossley; Mario Jametti

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Bookmark: http://trove.nla.gov.au/version/201856
Physical Description
  • preprint
Language
  • English

Edition details

Title
  • Pension Benefit Insurance and Pension Plan Portfolio Choice
Author
  • Thomas Crossley
  • Mario Jametti
Physical Description
  • preprint
Notes
  • Pension benefit guarantee policies have been introduced in several countries to pro- tect private pension plan members from the loss of income that would occur if a plan was underfunded when the sponsoring firm terminates a plan. Most of these public insurance schemes face financial dificulty and consequently policy reforms are being discussed or implemented. Economic theory suggests that such schemes will face moral hazard and adverse selection problems. In this note we test a specific theoretical prediction -- insured plans will invest more heavily in risky assets. Our test exploits differences in insurance arrangements across Canadian jurisdictions. We find that insured plans invest about 5 percent more in equities than do similar plans without benefit guarantees.
  • RePEc:mcm:sedapp:237
  • RePEc:mcm:qseprr:428
  • RePEc:lug:wpaper:0809
  • RePEc:ces:ceswps:_2498
  • Pension benefit guarantee policies have been introduced in several countries to protect private pension plan members from the loss of income that would occur if a plan was underfunded when the sponsoring firm terminates a plan. Most of these public insurance schemes face financial difficulty and consequently policy reforms are being discussed or implemented. Economic theory suggests that such schemes will face moral hazard and adverse selection problems. In this note we test a specific theoretical prediction: insured plans will invest more heavily in risky assets. Our test exploits differences in insurance arrangements across Canadian jurisdictions. We find that insured plans invest about 5 percent more in equities than do similar plans without benefit guarantees.
  • Pensions, benefit guarantee, moral hazard
  • RePEc:yca:wpaper:2008_05
Language
  • English
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