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Mario Jametti
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Journal Articles
Publisher: Journals Gateway
The Review of Economics and Statistics (2013) 95 (1): 337–341.
Published: 01 March 2013
Abstract
View articletitled, Pension Benefit Insurance and Pension Plan Portfolio Choice
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for article titled, Pension Benefit Insurance and Pension Plan Portfolio Choice
Pension benefit guarantees have been introduced in several countries to protect private plan members from the loss of income associated with the termination of an underfunded plan. Most such schemes face financial difficulty. Consequently, policy reforms are being contemplated. Economic theory suggests that such schemes will suffer moral hazard problems. We test a specific theoretical prediction: insured plans will invest more heavily in risky assets. Our test exploits policy differences across Canadian jurisdictions. We find that insured plans invest about 5% more in equities than do similar plans without benefit guarantees.