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Author : David A. Love
Publisher :
ISBN 13 :
Total Pages : 52 pages
Book Rating : 4.E/5 ( download)
Download or read book Why Do Firms Offer Risky Defined Benefit Pension Plans? written by David A. Love and published by . This book was released on 2007 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Anqi Dai
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (137 download)
Download or read book The Impact of Defined Benefit Pension Plans Freezes on Firm Credit Risk written by Anqi Dai and published by . This book was released on 2020 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Does Defined benefit pension plans freeze matter to firm credit risk? There are mainly two effect of DB plans freezes: direct effect that lower credit risk and incentive effect that increase the risk. This paper answer this question by examining whether company with frozen defined benefit pension plans are more likely to have better credit rating between 2010 and 2019. Change in pension accumulated benefit obligation is a unique measure this paper used for defined benefit pension plans freezes. The result is that the freezing defined benefit pension plans has a positive but small effect on credit risk, which is different from previous other research.
Author : Joshua D. Rauh
Publisher :
ISBN 13 :
Total Pages : 62 pages
Book Rating : 4.:/5 (129 download)
Download or read book Risk Shifting Versus Risk Management written by Joshua D. Rauh and published by . This book was released on 2010 with total page 62 pages. Available in PDF, EPUB and Kindle. Book excerpt: The asset allocation of defined benefit pension plans is a setting where both risk shifting and risk management incentives are likely be present. Empirically, firms with poorly funded pension plans and weak credit ratings allocate a greater share of pension fund assets to safer securities such as government debt and cash, whereas firms with well-funded pension plans and strong credit ratings invest more heavily in equity. These relations hold both in the cross-section and within firms and plans over time. The incentive to limit costly financial distress plays a considerably larger role than risk shifting in explaining variation in pension fund investment policy among U.S. firms.
Author : David Blitzstein
Publisher : Oxford University Press, USA
ISBN 13 : 0199204659
Total Pages : 270 pages
Book Rating : 4.1/5 (992 download)
Download or read book Restructuring Retirement Risks written by David Blitzstein and published by Oxford University Press, USA. This book was released on 2006-08-03 with total page 270 pages. Available in PDF, EPUB and Kindle. Book excerpt: Highlighting retirement security as a major policy concern, this book addresses the question 'What are the risks & rewards in pensions, & what paths can stakeholders chose to solve these problems?'. It deals with employees' needs & expectations, employers' intentions & realizations, & policymakers' efforts to resolve the many challenges.
Author : John Andrew Turner
Publisher : W.E. Upjohn Institute
ISBN 13 : 0880993545
Total Pages : 255 pages
Book Rating : 4.8/5 (89 download)
Download or read book Pension Policy written by John Andrew Turner and published by W.E. Upjohn Institute. This book was released on 2010 with total page 255 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book focuses on current pension policy issues. It takes into account the major changes in the prevalence of pension plans of different types, in pension law, and in the economic analysis of pensions. The book approaches pension policy from different perspectives. One perspective is the international perspective, with a focus on lessons from international experience for U.S. pension policymakers. While attention is paid to the economic analysis of pensions, the book focuses on advancing our understanding of pension policy. The book's goal is to improve pension policy, and ultimately the lives of retirees, in the United States and elsewhere.
Author : Barbara D. Bovbjerg
Publisher : DIANE Publishing
ISBN 13 : 1437916767
Total Pages : 38 pages
Book Rating : 4.4/5 (379 download)
Download or read book Defined Benefit Plans written by Barbara D. Bovbjerg and published by DIANE Publishing. This book was released on 2010 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: Some U.S. financial and pension consulting firms have recently proposed alternatives to terminating a defined benefit (DB) pension plan and contracting with an insur. co. to pay promised benefits. In their proposals, a plan sponsor would transfer the assets and liabilities of a hard-frozen DB plan along with additional money to a financial entity, which would become the new sponsor. This report addresses the following questions: (1) What is the basic model of proposed sales of frozen DB plans to third-party financial firms and how does it compare with a standard plan termination? (2) What are the potential risks and benefits of plan buyouts for participants, the Pension Benefit Guaranty Corp. (PBGC), plan sponsors, and other stakeholders?
Download or read book Risk Sharing and Hybrid Pension Plans written by and published by . This book was released on 2005 with total page 92 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Joshua Rauh
Publisher :
ISBN 13 :
Total Pages : 60 pages
Book Rating : 4.:/5 (163 download)
Download or read book Risk Shifting Versus Risk Management written by Joshua Rauh and published by . This book was released on 2007 with total page 60 pages. Available in PDF, EPUB and Kindle. Book excerpt: The asset allocation of defined benefit pension plans is a setting where both risk shifting and risk management incentives are likely be present. Empirically, firms with poorly funded pension plans and weak credit ratings allocate a greater share of pension fund assets to safer securities such as government debt and cash, whereas firms with well-funded pension plans and strong credit ratings invest more heavily in equity. These relations hold both in the cross-section and within firms and plans over time. The incentive to limit costly financial distress plays a considerably larger role than risk shifting in explaining variation in pension fund investment policy among U.S. firms.
Author : Divya Anantharaman
Publisher :
ISBN 13 :
Total Pages : 64 pages
Book Rating : 4.:/5 (13 download)
Download or read book Managerial Risk Taking Incentives and Corporate Pension Policy written by Divya Anantharaman and published by . This book was released on 2013 with total page 64 pages. Available in PDF, EPUB and Kindle. Book excerpt: Theory predicts that stockholders of firms with defined-benefit pension plans will engage in risk-shifting by underfunding plans and investing plan assets in risky securities, as their firms approach distress. The empirical evidence so far has, however, been consistent more with risk-management than risk-shifting. We test whether the compensation incentives of top management affect the extent of risk-shifting versus risk-management behavior in pension plans. We find that risk-shifting through pension underfunding is stronger with compensation structures that create high wealth-risk sensitivity (vega), and weaker with high wealth-price sensitivity (delta). These relationships hold across firms and within firms and managers over time. We find consistent but weaker results with risk-shifting through pension asset allocation to risky securities. While both CEO and CFO incentives affect pension strategy, CFO incentives dominate, suggesting that pension decisions fall within the CFO's domain. We find also that risk-shifting through pension underfunding is lower when CFOs' own pensions are larger. Overall, these findings show that top managers' compensation structure is an important driver of corporate pension policy; they also highlight firms within which the moral hazard concerns fueled by Pension Benefit Guaranty Corporation insurance are most relevant.
Author : Robert C. Merton
Publisher :
ISBN 13 :
Total Pages : 52 pages
Book Rating : 4.3/5 (9 download)
Download or read book Pension Plan Integration as Insurance Against Social Security Risk written by Robert C. Merton and published by . This book was released on 1984 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: The manifest purposes of integrating an employer-provided pension plan with social security are:(1) to ensure retirement income adequacy for all covered employees; and (2) to ensure retirement income equity, defined as equal total replacement rates for all employees regardless of salary level. The focus of this paper, however, is on an equally important (and perhaps latent) consequence of integration: the alteration of the risk-bearing relationships between employees, employers and the government vis-a-vis social security benefits. The main alteration is that the employer in effect insures his covered employees against adverse changes in their social security retirement benefit. Using the option-pricing methodology of modern contingent claims analysis, we develop a formal model to explore the quantitative aspects of this change. While the focus of the analysis is on full integration, we do explicitly deal with various degrees of partial integration as is currently practiced. We also analyze the effects of a switch from a non-integrated to an equivalent-cost integrated plan when private benefits are fixed in nominal terms and when they are indexed. In this connection we examine how integrated plans are affected when the sponsor makes ad hoc post-retirement benefit increases. We also consider the incentive effects on worker mobility of the adoption of integrated plans. The analysis is also used to highlight what we believe to be important unintended consequences of integrating pension plans with social security.
Author : Roy P. M. M. Hoevenaars
Publisher :
ISBN 13 :
Total Pages : 19 pages
Book Rating : 4.:/5 (129 download)
Download or read book Pricing Risk in Corporate Pension Plans written by Roy P. M. M. Hoevenaars and published by . This book was released on 2009 with total page 19 pages. Available in PDF, EPUB and Kindle. Book excerpt: New accounting rules and increased scarcity of risk capital have led to growing pressure on corporations to shift pension plan risk from employers to participants. This implies a shift from Defined Benefit (DB) plans to a variety of collective and individual Defined Contributions (DC) plans. Most of these shifts have been ad-hoc and not based on clear and objective criteria. This article shows how negotiations could be clarified by using modern option pricing and financing techniques. Both the value of the guarantees regarding accrued pension rights, as well as future rights to be accrued, can be objectively determined. For example, the authors show that a shift from a typical DB to a collective DC plan should cost the employer a lump sum payment of twelve percent of the accrued pension obligations and an increase in the contribution rate at four percent of pay.
Author : Zvi Bodie
Publisher : University of Chicago Press
ISBN 13 : 0226062899
Total Pages : 466 pages
Book Rating : 4.2/5 (26 download)
Download or read book Financial Aspects of the United States Pension System written by Zvi Bodie and published by University of Chicago Press. This book was released on 2008-04-15 with total page 466 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book provides valuable information and analysis to managers, policymakers, and investment counselors in the rapidly expanding field of pension funding. American workers, too, need answers and insights on how to invest their money and plan for their retirement. fifteen of America's leading financial analysts address such pressing questions as -What is the current financial status of the elderly, and how vulnerable are they to inflation? -What is the impact of inflation on the private pension system, and what are the effects of alternative indexing schemes? -What roles can the social security system play in the provision of retirement income? -What is the effect of the tax code and the Employee Retirement Income Security Act of 1974 (ERISA) on corporate pension policy? -How well funded are corporate pension plans, and is a firm's unfunded pension liability fully reflected in the market value of its common stock? Many of the conclusions these experts reach contradict and challenge popular views, thus providing fertile ground for innovation in pension planning.
Author : Marco Micocci
Publisher : CRC Press
ISBN 13 : 1439817545
Total Pages : 766 pages
Book Rating : 4.4/5 (398 download)
Download or read book Pension Fund Risk Management written by Marco Micocci and published by CRC Press. This book was released on 2010-01-25 with total page 766 pages. Available in PDF, EPUB and Kindle. Book excerpt: As pension fund systems decrease and dependency ratios increase, risk management is becoming more complex in public and private pension plans. Pension Fund Risk Management: Financial and Actuarial Modeling sheds new light on the current state of pension fund risk management and provides new technical tools for addressing pension risk from an integr
Author : Charles A. Jeszeck
Publisher : DIANE Publishing
ISBN 13 : 1437915094
Total Pages : 16 pages
Book Rating : 4.4/5 (379 download)
Download or read book Private Pensions: Conflicts of Interest Can Affect Defined Benefit and Defined Contribution Plans written by Charles A. Jeszeck and published by DIANE Publishing. This book was released on 2009-08 with total page 16 pages. Available in PDF, EPUB and Kindle. Book excerpt: Conflicts of interest typically exist when someone in a position of trust, such as a pension consultant, has competing professional or personal issues. Such competing interests can make it difficult for pension plan fiduciaries and others to fulfill their duties impartially. The proliferation of consulting work and the complexity of business arrangements among investment advisors, plan consultants, and others have increased the likelihood of conflicts of interests for both defined benefit (DB) plans, and defined contribution (DC) plans. This is a report on: (1) the effects undisclosed conflicts of interest may have on the financial performance of DB plans; and (2) the vulnerabilities that conflicts of interest may pose for DC plan participants. Illus.
Author : Li Jin
Publisher :
ISBN 13 :
Total Pages : 56 pages
Book Rating : 4.0/5 ( download)
Download or read book Do a Firm's Equity Returns Reflect the Risk of Its Pension Plans? written by Li Jin and published by . This book was released on 2004 with total page 56 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the empirical question of whether systematic equity risk of U.S. firms as measured by beta from the Capital Asset Pricing Model reflects the risk of their pension plans. There are a number of reasons to suspect that it might not. Chief among them is the opaque set of accounting rules used to report pension assets, liabilities, and expenses. Pension plan assets and liabilities are off-balance sheet, and are often viewed as segregated from the rest of the firm, with its own trustees. Pension accounting rules are complicated. Furthermore, the role of Pension Benefit Guaranty Corporation further clouds the real relation between pension plan risk and firm equity risk. The empirical findings in this paper are consistent with the hypothesis that equity risk does reflect the risk of the firm's pension plan despite arcane accounting rules for pensions. This finding is consistent with informational efficiency of the capital markets. It also has implications for corporate finance practice in the determination of the cost of capital for capital budgeting. Standard procedure uses de-leveraged equity return betas to infer the cost of capital for operating assets. But the de-leveraged betas are not adjusted for the risk of the pension assets and liabilities. Failure to make this adjustment will typically bias upwards estimates of the discount rate for capital budgeting. The magnitude of the bias is shown here to be large for a number of well-known U.S. companies. This bias can result in positive net-present-value projects being rejected.
Author : United States. Congress. House. Committee on Ways and Means. Subcommittee on Oversight
Publisher :
ISBN 13 :
Total Pages : 122 pages
Book Rating : 4.F/5 ( download)
Download or read book Retirement Security and Defined Benefit Pension Plans written by United States. Congress. House. Committee on Ways and Means. Subcommittee on Oversight and published by . This book was released on 2003 with total page 122 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : David A. Love
Publisher :
ISBN 13 :
Total Pages : 52 pages
Book Rating : 4.E/5 ( download)
Download or read book Should Risky Firms Offer Risk-free DB Pensions? written by David A. Love and published by . This book was released on 2009 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt:
