This paper examines the role of the shift in pension plans — from Defined Benefit to Defined Contribution — in explaining the recent increase in labor supply of older workers. A structural model of consumption, savings, Social Security, and pension plan heterogeneity is estimated using data from the Health and Retirement Study. Model simulations indicate that changes in pension plan composition...

This paper creates a synthetic pension data set through the use of regression and statistical matching procedures, and as a by-product, updates income replacement rates from defined benefit plans. This new data set contains detailed socioeconomic variables along with in-depth, employer-provided pension data. Through the use of data from the Internal Revenue Service (IRS) Form W-2, two earnings-...

In the context of the aging population, the debt risk and solvency situation of China’s pension plan are of major concern for government and individuals. The aim of this paper is to project public pension liabilities and evaluate the solvency sustainability of China’s pension reform during transition periods. By using cohort component and actuarial models, transition debt and solvency sustainab...

Inter-temporal optimization and deterministic lifestyle asset allocation strategies for defined-contribution pension plans are investigated and compared both analytically and numerically. The pension plan is assumed to invest in two types of asset, risk free assets and equities, or bonds and equities, and the plan members‟ terminal utility a power function of pension wealth at retirement with t...

Even risky pension sponsors could offer essentially riskless pension promises by contributing a sufficient level of resources to their pension trust funds and by investing those resources in fixed-income securities designed to deliver their payoffs just as pension obligations are coming due. However, almost no firm has chosen to fund its plan in this manner. We study the optimal funding choice ...

I show that risk-sharing pension plans can reduce some of the shortcomings of defined benefit and defined contributions plans. The risk-sharing pension plan presented aims to improve the stability of benefits paid to generations of members, while allowing them to enjoy the expected advantages of a risky investment strategy. The plan does this by adjusting the investment strategy and benefits in...

In this paper, we study the optimal investment strategy in the DC pension plan during the accumulation phase. During the accumulation phase, a pensionmember contributes a predetermined amount of money as premiums and the management of the pension plan invests the premiums in equities and bonds to increase the value of the accumulation. In practice, most of the DC pension plans have return of pr...

This report focuses on several funding and actuarial costing methods in occupational pension funds where the benefits are defined. As well-known, a defined benefit (DB) pension plan is a type of pension plan in which an employer/sponsor promises a specified pension payment, lump-sum (or combination thereof) on retirement that is predetermined by a formula based on the employee’s history (earnin...

We present simulation results for the likely pension outcomes for different defined-contribution (DC) pension plan members distinguished by occupation and gender. While our results suggest that key differences between outcomes depend on the strategic asset allocation strategy chosen (and hence on the rate of return on assets in relation to the growth rate in salaries), we also find that DC plan...