Risk-Sharing Alternatives for Pension Plan Design: An Overview and Case Studies

Rappaport, Anna M.; Peterson, A. Townsend

doi:10.2139/ssrn.2523158

Cited by 9 publications

(8 citation statements)

References 5 publications

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“…The Dutch advocate a combination approach they have adopted termed a "defined ambition" plan where workers are promised variable deferred annuities based on pension assets and a mortality risk pool (Bovenberg et al 2016). Other new models include some favored by labor unions (Blitzstein 2016), public sector entities (Rappaport and Peterson 2016), and many others detailed in Mitchell and Shea (2016).…”

Section: Discussionmentioning

confidence: 99%

Enhancing Risk Management for an Aging World

Mitchell

2017

SSRN Journal

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As the world confronts unprecedented global aging, academics and policymakers are growing increasingly aware of the need for better risk management tools to handle the demographic transition. It is therefore imperative to identify innovative insurance and financial market products that can enrich the range of options for households, firms, and governments facing the challenge of an aging population. After outlining thoughts on how rising longevity might shape financial markets, we discuss opportunities for the finance and insurance industries in this arena. We also highlight how policymakers could respond to improve efforts to better manage risk.

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Section: Discussionmentioning

confidence: 99%

Enhancing Risk Management for an Aging World

Mitchell

2017

SSRN Journal

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“…The main difference between DB and DC schemes comes from the exposure to different types of risks and how these risks are allocated between employer, employee, plan sponsor, and the government (Rappaport and Peterson, 2014). Any change in the pension system affects the risk-sharing framework and bears a balance of risk ensemble among actors.…”

Section: The Government's Expectationsmentioning

confidence: 99%

Pension Reforms and Risk Sharing Cycle: A Theory and Global Experience

Wolf¹,

Lorena²

2021

IJEBA

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Purpose: This paper offers an explanation to pension systems cyclical reforms, based on Central East Europe (CEE) countries experience over the last three decades. Design/Methodology/Approach: This paper develops a theory of risk sharing process and demonstrate it based on global experience over the last two decades. Finding: During the transition to funded pension design, the government not only transfers longevity and fiscal risks to the individual but also absorbs risks transferred from the public, where each market actor transfers undiversifiable risks to the other. The outcomes of this risk path realized in financial transfers, such as social security, means-tested and minimum pension guarantee. Consequently, funded pension designs naturally converge to a new landscape paradigm of risk sharing, including intergenerational and intra-generational play. Financial crises such as the recent COVID-19 pandemic foster the convergence process. Practical Implications Governments and central planners have to consider risk sharing mechanisms to ensure sustainability of pension designs during the transitions to funded schemes. Originality/Value: To the best of the author's knowledge, no other paper attempted to study the bi-path ways of risk during the pension transition and discover the mutual expectation of the pension market actors. There is a vast literature of risk sharing study in comparison between funded and unfunded pension schemes.

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“…The main difference between DB and DC schemes comes from the exposure to different types of risks, and how these risks are allocated between employer, employee, plan sponsor and the government (Rappaport and Peterson 2014). Any change in the pension system affects the risk-sharing framework and bearsbalance of risk ensemble among actors.…”

Section: The Government's Expectationsmentioning

confidence: 99%

The Expectation for Risk-Sharing Cycle: Theoretical Model and Global Implementation

Wolf¹

2021

TURCOMAT

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In this paper, we offer an explanation to pension systems cyclical reforms, based on Central East Europe (CEE) countries experience over the last three decades. We claim that in the transition to funded pension design, the government not only transfers longevity and fiscal risks to the individualbut also absorbs risks transferred from the public, where each market actor transfers undiversifiable risks to the other. This hidden risk path that has not been discussed yet in the literature, stemmed from the public expectation to risk premium or adequate old age benefits that evolves to political pressure. The outcomes of this risk path realized in financial transfers, such as social security, means-tested and minimum pension guarantee. Consequently, funded pension designs naturally converge to a new landscape paradigm of risk sharing, including intergenerational and intra-generational play. Financial crises such as the recent COVID-19 pandemic foster the convergence process.

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Risk-Sharing Alternatives for Pension Plan Design: An Overview and Case Studies

Cited by 9 publications

References 5 publications

Enhancing Risk Management for an Aging World

Enhancing Risk Management for an Aging World

Pension Reforms and Risk Sharing Cycle: A Theory and Global Experience

The Expectation for Risk-Sharing Cycle: Theoretical Model and Global Implementation

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