Peter Albrecht, Joachim Coche, Raimond Maurer, and Ralph Rogalla
- Published in print:
- 2006
- Published Online:
- September 2006
- ISBN:
- 9780199204656
- eISBN:
- 9780191603822
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199204659.003.0011
- Subject:
- Economics and Finance, Financial Economics
This chapter analyzes pension plan costs and investment strategies in the context of alternative hybrid pension plans, which are optimal either from the perspective of the plan sponsor or the ...
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This chapter analyzes pension plan costs and investment strategies in the context of alternative hybrid pension plans, which are optimal either from the perspective of the plan sponsor or the beneficiaries. It evaluates the impact of minimum and maximum limits for pension benefits as well as minimum guarantees and caps on members’ investment returns. For low/medium risk portfolios, minimum benefit guarantees tend to be more expensive than minimum return guarantees, but for the latter, costs increase exponentially with investment risk. It is also shown that the sponsor’s portfolio choice differs from that of the participants, depending on plan design and risk aversion. One way to resolve these differences is to combine minimum return guarantees and caps on investment returns, which shares investment risks and returns more equally between sponsor and beneficiaries, and keeps pension plan costs under control.Less
This chapter analyzes pension plan costs and investment strategies in the context of alternative hybrid pension plans, which are optimal either from the perspective of the plan sponsor or the beneficiaries. It evaluates the impact of minimum and maximum limits for pension benefits as well as minimum guarantees and caps on members’ investment returns. For low/medium risk portfolios, minimum benefit guarantees tend to be more expensive than minimum return guarantees, but for the latter, costs increase exponentially with investment risk. It is also shown that the sponsor’s portfolio choice differs from that of the participants, depending on plan design and risk aversion. One way to resolve these differences is to combine minimum return guarantees and caps on investment returns, which shares investment risks and returns more equally between sponsor and beneficiaries, and keeps pension plan costs under control.
Olivia S. Mitchell
- Published in print:
- 2009
- Published Online:
- February 2010
- ISBN:
- 9780199573349
- eISBN:
- 9780191721946
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199573349.003.0001
- Subject:
- Business and Management, Public Management, Pensions and Pension Management
Pension systems are a central component of the compensation package for workers in virtually every developed nation, and nowhere are they more important than for public sector employees. The growth ...
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Pension systems are a central component of the compensation package for workers in virtually every developed nation, and nowhere are they more important than for public sector employees. The growth of public pensions has spurred a hot debate of late, since some private sector employees envy their public sector counterparts the relatively generous benefits negotiated by strong unions that traditionally represent civil servants. Also some politicians had argued that pension and health-care benefits paid to police and firefighters, schoolteachers, and other civil servants have become too expensive for the public purse, especially when benefits have been cut in the private sector And the costs of maintaining public sector pension plans have come under the microscope of late, as municipalities, states, and other governmental units facing difficult financial times and volatile capital markets realize they must cut corners. This volume takes up these and other themes pertinent to the future of public employee retirement systems around the world.Less
Pension systems are a central component of the compensation package for workers in virtually every developed nation, and nowhere are they more important than for public sector employees. The growth of public pensions has spurred a hot debate of late, since some private sector employees envy their public sector counterparts the relatively generous benefits negotiated by strong unions that traditionally represent civil servants. Also some politicians had argued that pension and health-care benefits paid to police and firefighters, schoolteachers, and other civil servants have become too expensive for the public purse, especially when benefits have been cut in the private sector And the costs of maintaining public sector pension plans have come under the microscope of late, as municipalities, states, and other governmental units facing difficult financial times and volatile capital markets realize they must cut corners. This volume takes up these and other themes pertinent to the future of public employee retirement systems around the world.
Robert L. Clark and Olivia S. Mitchell (eds)
- Published in print:
- 2005
- Published Online:
- February 2006
- ISBN:
- 9780199284603
- eISBN:
- 9780191603013
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199284601.001.0001
- Subject:
- Economics and Finance, Financial Economics
This book explores how rising pension and healthcare costs, along with workforce aging, are affecting pension and retirement planning around the world. Many middle-aged workers now realize that they ...
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This book explores how rising pension and healthcare costs, along with workforce aging, are affecting pension and retirement planning around the world. Many middle-aged workers now realize that they will have to work longer than intended, as they begin to recognize that their retirement resources will not be inadequate to finance retirement consumption. Volatile capital markets, rising medical-care costs, and low saving rates make retirement behaviour and policy a moving target. This book explores these themes, touching on a diverse set of issues ranging from employment trends to pension accounting and investment, to retirement system overhaul. It illustrates how employers are actively reformulating the meaning of work and retirement, seeking to encourage more people to work longer than ever before in the face of projected labour shortages. At the same time, public and private trust in traditional pension offerings is rapidly eroding, as companies alter, amend, and terminate their conventional plans in the face of poor investment performance and new methods of pension accounting.Less
This book explores how rising pension and healthcare costs, along with workforce aging, are affecting pension and retirement planning around the world. Many middle-aged workers now realize that they will have to work longer than intended, as they begin to recognize that their retirement resources will not be inadequate to finance retirement consumption. Volatile capital markets, rising medical-care costs, and low saving rates make retirement behaviour and policy a moving target. This book explores these themes, touching on a diverse set of issues ranging from employment trends to pension accounting and investment, to retirement system overhaul. It illustrates how employers are actively reformulating the meaning of work and retirement, seeking to encourage more people to work longer than ever before in the face of projected labour shortages. At the same time, public and private trust in traditional pension offerings is rapidly eroding, as companies alter, amend, and terminate their conventional plans in the face of poor investment performance and new methods of pension accounting.
Gordon L. Clark
- Published in print:
- 2003
- Published Online:
- August 2004
- ISBN:
- 9780199261765
- eISBN:
- 9780191601248
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199261768.003.0008
- Subject:
- Economics and Finance, Financial Economics
This chapter examines pension reform in the UK. It argues that future reform of the UK pension system is unnecessary to make it sustainable in terms of costs. Forecast expenditures can be met without ...
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This chapter examines pension reform in the UK. It argues that future reform of the UK pension system is unnecessary to make it sustainable in terms of costs. Forecast expenditures can be met without tax increases due to large cuts to the state pension system in the last 20 years. However, whether the current system is politically sustainable remains uncertain. Given that a rising percentage of the electorate will be aged over the state pension age, what they expect with regards to retirement income may impact current pension system.Less
This chapter examines pension reform in the UK. It argues that future reform of the UK pension system is unnecessary to make it sustainable in terms of costs. Forecast expenditures can be met without tax increases due to large cuts to the state pension system in the last 20 years. However, whether the current system is politically sustainable remains uncertain. Given that a rising percentage of the electorate will be aged over the state pension age, what they expect with regards to retirement income may impact current pension system.
Roderick B. Crane, Michael Heller, and Paul J. Yakoboski
- Published in print:
- 2009
- Published Online:
- February 2010
- ISBN:
- 9780199573349
- eISBN:
- 9780191721946
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199573349.003.0013
- Subject:
- Business and Management, Public Management, Pensions and Pension Management
This chapter assesses best-practice benchmarks for the design of defined contribution plans in the public sector, where such plans are the primary, or core, employment-based retirement benefit. These ...
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This chapter assesses best-practice benchmarks for the design of defined contribution plans in the public sector, where such plans are the primary, or core, employment-based retirement benefit. These benchmarks rely on the notion that providing an adequate and secure retirement income for participants is the primary plan objective.Less
This chapter assesses best-practice benchmarks for the design of defined contribution plans in the public sector, where such plans are the primary, or core, employment-based retirement benefit. These benchmarks rely on the notion that providing an adequate and secure retirement income for participants is the primary plan objective.
Ken McDonnell
- Published in print:
- 2009
- Published Online:
- February 2010
- ISBN:
- 9780199573349
- eISBN:
- 9780191721946
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199573349.003.0006
- Subject:
- Business and Management, Public Management, Pensions and Pension Management
It is often argued that compensation patterns for public sector employees are higher than in the private sector. This chapter examines some of the reasons for the observed differences in total ...
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It is often argued that compensation patterns for public sector employees are higher than in the private sector. This chapter examines some of the reasons for the observed differences in total compensation costs between US state and local government employers and private industry employers. The author examines compensation costs by industry, occupation, union status, and employee benefit participation.Less
It is often argued that compensation patterns for public sector employees are higher than in the private sector. This chapter examines some of the reasons for the observed differences in total compensation costs between US state and local government employers and private industry employers. The author examines compensation costs by industry, occupation, union status, and employee benefit participation.
Edwin C. Hustead
- Published in print:
- 2009
- Published Online:
- February 2010
- ISBN:
- 9780199573349
- eISBN:
- 9780191721946
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199573349.003.0007
- Subject:
- Business and Management, Public Management, Pensions and Pension Management
This chapter compares the administrative costs of public sector defined benefit and defined contribution systems offered by the federal government and many states. Administrative expenses are ...
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This chapter compares the administrative costs of public sector defined benefit and defined contribution systems offered by the federal government and many states. Administrative expenses are presented as percentages of both income and assets, and the author discusses how administrative expenses might enter into the decision by a public sector employer as to whether to establish a defined contribution plan.Less
This chapter compares the administrative costs of public sector defined benefit and defined contribution systems offered by the federal government and many states. Administrative expenses are presented as percentages of both income and assets, and the author discusses how administrative expenses might enter into the decision by a public sector employer as to whether to establish a defined contribution plan.
