Risk-sharing in pension plans: multiple options

Nicholas Barr

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: A response to pressures on pension finance caused by population ageing and economic turbulence has been a substantial move from traditional defined-benefit plans in which, at least in principle, all risk falls on the contributions side, to defined-contribution plans in which risk during accumulation all falls on the benefits side. This paper argues that both designs are ‘corner solutions’ and hence generally suboptimal, and goes on to set out a range of designs that offer different ways of sharing risk among workers, employers, future pensioners and current pensioners.

Keywords: defined contribution; defined benefit; risk sharing; population ageing; risk-sharing; defined-benefit; defined-contribution (search for similar items in EconPapers)
JEL-codes: J1 (search for similar items in EconPapers)
Pages: 7 pages
Date: 2025-01-27
New Economics Papers: this item is included in nep-age and nep-rmg
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Published in Economics and Philosophy, 27, January, 2025, 41(1), pp. 192 - 198. ISSN: 0266-2671

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