Solvency and performance persistence of defined benefit private and public pension plans

Bruvine Orchidée Mazonga Mfoutou and Yuan Tao Xie

African Journal of Economic and Management Studies, 2022, vol. 14, issue 4, 557-568

Abstract: Purpose - This study aims to examine the solvency and performance persistence of defined benefit private and public pension plans (DBPPs) in the Republic of Congo. Design/methodology/approach - The authors use the 2 × 2 contingency table approach and the time product ratio (TPR)-based cross-product ratio (CPR) on data covering ten years from 2011 to 2020, with variable funded ratios and excess returns, to determine the solvency and performance persistence of defined benefit pension plans. Findings - The authors document a lack of solvency and performance persistence in DBPP funds. They conclude that the solvency and performance of DBPP funds are not repetitive. The previous year's private and public defined benefit pension funds’ results do not repeat in the current year. Hence, the current solvency and performance of defined benefit pension funds are not good predictors of future funds' solvency and performance. Originality/value - To the best of the authors’ knowledge, this study is the first to combine solvency and performance to examine the persistence of defined benefit pension plans in sub-Saharan Africa.

Keywords: Defined benefit; Private pension fund; Public pension fund; Solvency persistence; Performance persistence; Funded ratio; Excess return; Contingency tables; Time product ratio (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:eme:ajemsp:ajems-02-2022-0062

DOI: 10.1108/AJEMS-02-2022-0062

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