The Sustainability of Pension Schemes

Abstract

BIS Working Papers are written by members of the Monetary and Economic Department of the Bank for International Settlements, and from time to time by other economists, and are published by the Bank. The papers are on subjects of topical interest and are technical in character. The views expressed in them are those of their authors and not necessarily the views of the BIS. This publication is available on the BIS website (www.bis.org).

The financial cycle and macroeconomics: What have we learnt?

“…See BIS (2012) for a discussion of these issues and supporting empirical evidence. For the impact on pension funds, seeRamaswamy (2012).36 For overviews of the empirical evidence on the impact of central bank balance sheet policies on financial markets and the macroeconomics in the major advanced economies, see, eg,Williams (2011),Cecioni et al (2011) andMeaning and Zhu (2012).…”

Romanian pensions system at a glance: some equity comments

“…In addition, the 2008 economic crisis has exacerbated the sustainability risks of the pension systems (Ramaswamy, 2012). Although important reforms have been initiated in many countries (the increase of retirement age, the introduction of privately funded schemes, the increase of contribution rates, and even the reduction of pension benefits), with net positive results (Karam, Muir, Pereira, & Tulandhar, 2010) further reforms are necessary to ensure long-run fiscal sustainability (Zaidi & Rejniak, 2010).…”

Ultra Easy Monetary Policy and the Law of Unintended Consequences

“…Perhaps more importantly, many corporations still have significant obligations in the form of defined benefit pension plans. Ramaswamy (2012) presents a chilling quantitative analysis of the effects of interest rate changes on public pension funds and defined benefit funds. The essence of the argument is that lower interest rates reduce the asset revenues of pension funds and raise the present value of future liabilities.…”

“…110 These are very similar to the implications for pension funds which were discussed above. 111 Dickson (2001) 112 Antolin et al (2011), French et al (2011), Standard and Poors (2011 and Ramaswamy (2012) 33 companies had little room to maneuver on the liability side because of previous contractual agreements.…”