The structural impact of the shift from defined benefits to defined contributions

Maddalena Ghio, Angelica Ghiselli, Benjamin Mosk and Linda Rousová

Economic Bulletin Boxes, 2021, vol. 5

Abstract: This box studies the potential consequences of the ongoing shift away from defined benefit (DB) towards defined contribution (DC) products in the insurance and pension fund (ICPF) sector. In view of the different risks associated with these products, their portfolio allocations differ, with DB products being more heavily invested in long-duration fixed-income assets. Given the sizeable amount of ICPFs’ assets under management, the move from DB to DC products can reduce the demand for these assets, potentially having profound effects on the financial system and the economy. Such effects may include a steeper yield curve, a boost to equity financing, and more uncertainty in the build-up of retirement savings. JEL Classification: G22, G23, H55, E34, E44

Keywords: defined benefit; defined contribution; insurance corporations; Pension funds (search for similar items in EconPapers)
Date: 2021-08
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