Vulnerabilities in Defined-Benefit Pension Plans
Discussion Papers from Bank of Canada
An effective pension system enhances economic and financial efficiency. A majority of pension plans in Canada are defined-benefit (DB) plans, but DB plans are under stress from increasing longevity, low long-term interest rates, and the shrinking equity premium. DB plans are vulnerable to such shocks because they are complex financial vehicles, with interdependencies not fully understood by those who design, administer, regulate, and otherwise influence their operation. In this paper, I provide an overview of the basic economic workings of a highly stylized DB pension plan. I use the framework to highlight some of the misconceptions about these plans and explain why the burden on sponsors has been increasing.
Keywords: Financial; institutions (search for similar items in EconPapers)
JEL-codes: G23 (search for similar items in EconPapers)
References: View complete reference list from CitEc
Citations View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.bankofcanada.ca/en/res/dp/2007/dp07-3.pdf [301 Moved Permanently]--> https://www.bankofcanada.ca/en/res/dp/2007/dp07-3.pdf)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:bca:bocadp:07-3
Access Statistics for this paper
More papers in Discussion Papers from Bank of Canada 234 Wellington Street, Ottawa, Ontario, K1A 0G9, Canada.
Bibliographic data for series maintained by ().