Pension Benefit Insurance and Pension Plan Portfolio Choice

Thomas Crossley () and Mario Jametti ()

No 2498, CESifo Working Paper Series from CESifo

Abstract: Pension benefit guarantee policies have been introduced in several countries to protect private pension plan members from the loss of income that would occur if a plan was underfunded when the sponsoring firm terminates a plan. Most of these public insurance schemes face financial difficulty and consequently policy reforms are being discussed or implemented. Economic theory suggests that such schemes will face moral hazard and adverse selection problems. In this note we test a specific theoretical prediction: insured plans will invest more heavily in risky assets. Our test exploits differences in insurance arrangements across Canadian jurisdictions. We find that insured plans invest about 5 percent more in equities than do similar plans without benefit guarantees.

Keywords: pensions; benefit guarantee; moral hazard (search for similar items in EconPapers)
JEL-codes: C21 G11 G23 (search for similar items in EconPapers)
Date: 2008
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Pension Benefit Insurance and Pension Plan Portfolio Choice (2013)
Working Paper: Pension Benefit Insurance and Pension Plan Portfolio Choice (2008)
Working Paper: Pension Benefit Insurance and Pension Plan Portfolio Choice (2008)
Working Paper: Pension Benefit Insurance and Pension Plan Portfolio Choice (2008)
Working Paper: Pension Benefit Insurance and Pension Plan Portfolio Choice (2008)
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