 The optimal design of funded pensionsLSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library Abstract: In many countries, pension funds based on individual accounts have been affected by high operating costs. Contract theory helps to unravel the nature of such problems: managers of pension funds have strong incentives to manipulate market expectations about their capacity through wasteful activities (e.g. promotion). Thus, competition among pension funds entails efficiency loses, due to pension savings attraction efforts, as well as gains, related to investments in asset management skills. Regulations capping fees or costs of pension funds worsen market inefficiency, while a public pension fund competing with private ones improves (at least weekly) it. Taking into account political and commitment constraints affecting public institutions, a quasi-competitive pension scheme - centralizing contribution collection, auctioning the right to manage raised money to competitive fund managers, and affording an opting out choice to households -Pareto-dominates (at least weekly) the market of pension funds. Keywords: pension funds; signaling; public-private provision mechanism (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:24519 Access Statistics for this paper More papers in LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library LSE Library Portugal Street London, WC2A 2HD, U.K.. Contact information at EDIRC. |
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