Comparison between Charges on Flow and Charges on Balance in Individual-Account Pension Systems

Luis Chávez-Bedoya and Nelson R. Ramírez-Rondán

Apuntes. Revista de ciencias sociales, 2016, vol. 43, issue 78, 61-88

Abstract: In this present article, we develop a discrete-time methodology to compare front-end load and balance fees in the accumulation phase of a definedcontribution pension fund under a system of individual accounts. Using this methodology, we study the effect of risk aversion and other relevant variables in the performance and suitability of the aforementioned types of fees. Finally, we carry out a practical application and show the results for the Peruvian Private Pension System, including indifference values between fees and certainty equivalent ratios.

Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:pai:apunup:en-78-03

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