Sostenibilità Finanziaria e Rischio Politico Degli Schemi Pensionistici A Contribuzione Definita: Una Prospettiva Macroprudenziale (Financial Sustainability and Political Risk for Defined Contribution Pension Schemes: A Macroprudential Perspective)

Abstract The use of a gender-neutral annuity divisor introduces an intra-generational redistribution from short-lived towards long-lived individuals; this entails a transfer of wealth from males to females and from low socioeconomic groups to high socioeconomic groups. With some subpopulations consisting of females from low socioeconomic groups (or males from high groups), the net effect of the redistribution is unclear. The study aims to quantify the lifetime income redistribution of a generic NDC system using two types of divisor – the demographic and the economic – to compute the amount of an initial pension. With this in mind, the redistribution (actuarial fairness) among subpopulations is assessed through the ratio between the present value of expected pensions received and contributions paid. We find that all subgroups of women and men with high educational attainment benefit from the use of the unisex demographic divisor. This paper also shows that the value of the economic divisor depends markedly on population composition. When mortality differentials by gender and level of education are considered, economic divisors are mostly driven by the longevity effect corresponding to gender.

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Saving with Group or Individual Personal Pension Schemes: How Much Difference Does It Make?

Management Science ◽

10.1287/mnsc.2021.4083 ◽

2021 ◽

Author(s):

Anna (Ania) Zalewska

Keyword(s):

Fund Performance ◽

Pension Funds ◽

Third Party ◽

Quality Of Services ◽

Individual Investors ◽

Defined Contribution ◽

The Public ◽

Pension Schemes ◽

Institutional Differences

The quality of services provided by institutional investors has attracted considerable attention. This paper adds to the debate by showing that institutional differences in setting up defined contribution personal schemes have an economically and statistically significant impact on the returns. Using a sample of 10,326 UK defined contribution personal pension funds over July 1990–June 2019, I show that pension funds that have a third party involved in contract setting and subsequent oversight deliver 0.96%–1.67% higher gross returns and charge 0.7% lower fees than pension funds offered directly to the public without any well-informed third party involved. I also show that the introduction of additional governance bodies in 2015 resulted in a widening of the performance gap, which further supports the notion that investment governance has a material impact on fund performance. The results highlight the importance of investment oversight and call for more protection for individual investors. This paper was accepted by Tomasz Piskorski, finance.

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