Premiums of the Pension Benefit Guarantee Corporation and risk-taking by pension plans

Katarzyna Romaniuk

The Quarterly Review of Economics and Finance, 2019, vol. 74, issue C, 301-307

Abstract: This paper focuses on defining Pension Benefit Guarantee Corporation (PBGC) premiums. We propose an analytical framework to analyze the effect of premium form on risk-taking by sponsoring firms in their pension plans. We show that risk-taking increases (decreases) when a firm's probability of bankruptcy is superior (inferior) to the sum of the underfunding proportion considered in the premium and of the minimum funding requirement parameters, this sum being divided by the level of the guarantee.

Keywords: PBGC; Policy levers; Premium; Defined benefit pension plan; Risk-taking (search for similar items in EconPapers)
JEL-codes: G22 G23 G28 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:quaeco:v:74:y:2019:i:c:p:301-307

DOI: 10.1016/j.qref.2019.01.003

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