Replicating intergenerational longevity risk sharing in collective defined contribution pension plans using financial markets

2018 ◽  
Vol 78 ◽  
pp. 286-300 ◽  
Author(s):  
Enareta Kurtbegu
Keyword(s):  
Financial Markets ◽  
Risk Sharing ◽  
Pension Plans ◽  
Longevity Risk ◽  
Defined Contribution

scholarly journals An analysis of the Dutch-style pension plans proposed by UK policy-makers

2021 ◽  
pp. 1-21
Author(s):  
IQBAL OWADALLY ◽  
RAHIL RAM ◽  
LUCA REGIS
Keyword(s):  
Risk Sharing ◽  
Pension Plans ◽  
Retirement Savings ◽  
Investment Strategies ◽  
Defined Contribution ◽  
Replacement Rate ◽  
Policy Makers ◽  
Pension Schemes ◽  
Simulation Based ◽  
The Uk

Abstract Collective Defined Contribution (CDC) pension schemes are a variant of collective pension plans that are present in many countries and especially common in the Netherlands. CDC schemes are based on the pooled management of the retirement savings of all members, thereby incorporating inter-generational risk-sharing features. Employers are not subject to investment and longevity risks as these are transferred to plan members collectively. In this paper, we discuss policy related to the proposed introduction of CDC schemes to the UK. By means of a simulation-based study, we compare the performance of CDC schemes vis-à-vis typical Defined Contribution schemes under different investment strategies. We find that CDC schemes may provide retirees with a higher income replacement rate on average, together with less uncertainty.

scholarly journals Overview of the Issue

2004 ◽  
Vol 3 (3) ◽  
pp. 269-270
Author(s):  
JEFFREY BROWN ◽  
MIKE ORSZAG ◽  
SYLVESTER J. SCHIEBER
Keyword(s):  
Risk Sharing ◽  
Financial Risk ◽  
Labour Force ◽  
Financial Education ◽  
The United States ◽  
Pension Plans ◽  
Defined Contribution ◽  
Administrative Costs ◽  
Defined Contribution Plans ◽  
Key Issues

The last decade has seen tremendous interest in hybrid pension plans in the United States. These plans combine risk sharing between employers and employees with increased incentives for employees to remain in the labour force. Hybrid plans avert many of the key issues with defined contribution plans, such as participant exposure to financial risk, the consequent need for extensive financial education and high administrative costs. Hybrids also help rectify some of the main drawbacks of traditional final salary plans: lack of portability, high incentives to retire early and redistribution towards those whose wage growth is above average.

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