Participant Investment Behavior and Investment Performance in Defined Contribution Plans: Evidence from Small Firms in South Korea

ABSTRACT Both the business media and the popular press have emphasized the underfunding problems associated with pension funds that are set aside for state and local government workers, a group that also includes teachers and professors at state-affiliated colleges and universities. The realization that pension funds are typically underfunded stems from the fact that the accounting standards associated with state and local government employee pension funds have led to greater transparency since 2011. This paper examines, explains, and interprets the historical development over the last 70 years of accounting standards for state and local government pension funds in the United States. Changing accounting standards, along with economic and social change, have led to consequences such as employers transforming their pension programs to avoid substantial costs and significant liabilities, for example by changing from defined benefit to defined contribution plans.

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Replicating Private Equity with Value Investing, Homemade Leverage, and Hold-to-Maturity Accounting

Review of Financial Studies ◽

10.1093/rfs/hhab020 ◽

2021 ◽

Author(s):

Erik Stafford

Keyword(s):

Private Equity ◽

Small Firms ◽

Publicly Traded ◽

Investment Performance ◽

Value Investing ◽

Equity Funds ◽

Private Equity Funds ◽

Asset Selection ◽

Investment Process ◽

Stock Portfolio

Abstract The contributions of asset selection and incremental leverage to buyout investment performance are more important than typically assumed or estimated to be. Buyout funds select small firms with distinct value characteristics. Public equities with these characteristics have high risk-adjusted returns relative to common factors. Adding incremental leverage to a publicly traded stock portfolio increases both risks and mean returns in this sample. Direct investments in private equity funds earn lower mean returns than a replicating strategy designed to mimic these key economic features of their investment process with public equities and brokerage loans.

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Defined Benefit Plans vs. Defined Contribution Plans: An Evaluation Framework Using Random Returns

SSRN Electronic Journal ◽

10.2139/ssrn.2954196 ◽

2017 ◽

Author(s):

V. Sivarama Krishnan ◽

Julie Cumbie

Keyword(s):

Evaluation Framework ◽

Defined Benefit ◽

Defined Contribution ◽

Defined Contribution Plans ◽

Defined Benefit Plans

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How Do Pension Changes Affect Retirement Preparedness? The Trend to Defined Contribution Plans and the Vulnerability of the Retirement Age Population to the Stock Market Decline of 2008-2009

SSRN Electronic Journal ◽

10.2139/ssrn.1513405 ◽

2009 ◽

Cited By ~ 4

Author(s):

Alan L. Gustman ◽

Thomas L. Steinmeier ◽

Nahid Tabatabai

Keyword(s):

Stock Market ◽

Retirement Age ◽

Defined Contribution ◽

Defined Contribution Plans ◽

Retirement Preparedness

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The impact of employer-delayed deposits on plan participant wealth

Managerial Finance ◽

10.1108/mf-02-2016-0052 ◽

2016 ◽

Vol 42 (12) ◽

pp. 1171-1179

Author(s):

Jeffrey Scott Jones

Keyword(s):

Design Methodology ◽

Defined Contribution ◽

Regulatory Oversight ◽

Content Type ◽

Defined Contribution Plans ◽

Economic Significance ◽

History Of ◽

Defined Contribution Plan ◽

The Impact ◽

Primary Contribution

Purpose The purpose of this paper is to examine the impact of employer-delayed deposits to defined contribution plans on plan participant wealth. The history of regulatory oversight on the obligations of employers to remit deposits to defined contribution plans on behalf of employees is discussed. In light of these regulations, the paper discusses and examines situations in which employers may legally delay the deposit of employee contributions to a defined contribution plan and how the existence of various calendar anomalies may impact the returns of plan participants. Design/methodology/approach Simulated equity portfolios over the period 1985-2014 are created to determine the economic significance of possible delays in plan deposits on the accumulated wealth of plan participants. Findings The findings suggest that in situations where employees are paid monthly at the end of the month, it is always to their benefit to have their funds deposited as soon as possible. However, for employees paid weekly at the end of the week, a slight delay (one to three days) in the deposit of funds by the employer may actually be beneficial for the employee, particularly if the employee invests heavily in small and mid-cap stocks. Originality/value This is the first paper to explicitly study the impact of an employer’s timing of deposits to a defined contribution plan on the accumulated wealth of plan participants, and is thus the primary contribution of the paper.

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