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Pension Plans (pension + plan)
Selected AbstractsCREATING VALUE IN PENSION PLANS (OR, GENTLEMEN PREFER BONDS)JOURNAL OF APPLIED CORPORATE FINANCE, Issue 4 2003Jeremy Gold Pension funds are typically one-half to two-thirds invested in equities because equities are expected to outperform other financial assets over the long term, and the long-term nature of pension fund liabilities seems well suited to absorbing any short-term return volatility. What's more, U.S. GAAP currently makes it possible to take credit in advance for the higher anticipated earnings on equity investments without acknowledging their inherent risk. But by allowing the higher expected returns from stocks to reduce a company's current pension expenses, the accounting treatment conflicts with some very basic principles of finance (in particular, the idea that investors must earn higher returns on riskier investments just to "break even"), conceals systematic biases in the actuarial analysis, and gives managers considerable latitude to manipulate the bottom line. The authors suggest a startlingly different approach. They argue that pension assets should be invested entirely in duration-matched debt instruments for two reasons: (1) to capture the full tax benefits of pre-funding their pension obligations and (2) to improve overall corporate risk profiles by converting general stock market risk into firm-specific operating risk, where corporate managers should have a comparative advantage and can generate real value. Investing exclusively in bonds would take better advantage of the tax-exempt status of pension plans and greatly reduce fund management costs, while at the same time helping o shore up fund quality and sharpening corporate executives' focus on their real operating assets. [source] What Do Employees Know About Their Pension Plan?INDUSTRIAL RELATIONS, Issue 4 2000Andrew A. Luchak Original survey data based on 529 respondents in a large organization are used to analyze how much employees know about various features of their occupational pension plan. While the level of understanding was quite low among all employees, it was quite high among those for whom the knowledge matters most in terms of their behavioral decision making. Our results show that rather than being optimal labor contracts that workers enter into with full knowledge at the time of employment, pension contracts are more like contingent claims contracts evolving under conditions of uncertainty and incomplete information. [source] Voluntary Contributions to Personal Pension Plans: Evidence from the British Household Panel SurveyFISCAL STUDIES, Issue 4 2000Alessandra Guariglia Abstract In this paper, we use data from the British Household Panel Survey (BHPS) for the years 1992 to 1998 to study the determinants of saving in the form of voluntary contributions to personal pension plans (PPPs). We first estimate a probit model with selection for the probability of making these voluntary contributions. We then estimate a random-effects tobit regression for the amounts contributed and compare the results with those of a similar regression for conventional saving. Our findings suggest that voluntary contributions to PPPs are made essentially for retirement purposes, whereas conventional saving is undertaken for precautionary motives. The former type of saving is thus unlikely to offset the latter completely. [source] The Current Situation of Retirement Income Provisions in Japan: Social Security Pension Schemes and Corporate Pension PlansASIAN SOCIAL WORK AND POLICY REVIEW, Issue 2 2009Junichi Sakamoto Japan has been faced with rapid population ageing for decades. This has continuously reduced the level of social security pension benefits. Based on this it is often said that corporate pension plans should play a wider role forward in providing retirement benefits. However, we also have to know that there is a limit to what corporate pension plans can do in place of the social security pension schemes. In this paper we extract lessons from the history of social security pension schemes in our country and try to define the roles of corporate pension plans and social security pension schemes. In conclusion we should keep adequacy of social security pension benefits even if the contribution rate becomes a bit higher. Corporate pension plans just enrich people's life in retirement. We have to remember that corporate pension plans were not certain means for reducing the poverty in old age and that for this reason social security pension schemes by social insurance were invented. [source] Policy Change and the Politics of Ideas: The Emergence of the Canada/Quebec Pension PlansCANADIAN REVIEW OF SOCIOLOGY/REVUE CANADIENNE DE SOCIOLOGIE, Issue 3 2009KRISTINA BABICH Insistant sur l'impact direct des idées sur le changement politique, les auteurs se penchent sur l'adoption du Régime de rentes du Québec (RRQ) et du Régime de pensions du Canada (RPC) de 1965, en examinant deux questions étroitement liées: 1) Pourquoi le gouvernement fédéral a-t-il décidé de créer au milieu des années 1960 un système public de pension proportionnel aux revenus, en plus du Programme de la sécurité de la vieillesse alors en vigueur? et 2) Pourquoi ce nouveau système présente-t-il un taux de remplacement plus élevé que celui proposé initialement, de même qu'un régime différent pour le Québec? De manière à répondre à ces deux questions, les auteurs analysent les débats menant à l'adoption du RRQ et du RPC. Stressing the direct impact of ideas on policy change, this article explores the adoption of the Canada and Quebec Pension Plans (C/QPP) in 1965 by addressing two closely related questions: in the mid-1960s: why did the federal government decide to create an earnings-related public pension system on top of the existing Old Age Security program? Second, why did that new system feature a replacement rate higher than initially proposed as well as a separate scheme for the province of Quebec? In order to answer these two questions, the article analyzes the debates leading to the enactment of the C/QPP. [source] Creating Value Through Corporate GovernanceCORPORATE GOVERNANCE, Issue 3 2002Robert A.G. Monks Value and governance are such familiar words that we do not often enough reflect on their meanings in a specific situation. This paper will suggest: Value is in the eye of the beholder. The appearance of governance may be preferable to the real thing. In order better to understand value, we will work with a simple question , is it appropriate for a global investor to purchase common shares in Volkswagen? There are many kinds of shareholder, each with distinctive interests that are not always compatible with the interests of the other investors. A global investor is typically the trustee of a pension plan with the simple obligation to collateralise the pension promise by maximising the long,term value of trust assets. The beneficiaries of pension funds are not rich people. Fluctuations in market values are no longer primarily a question as to whether rich people are a bit richer or poorer, they are a question as to whether pensions will be paid to the roughly half of the population of the OECD world who have interests in employee benefit plans. This makes investment a matter of social and political concern. At the end of our trip through the mythology and prospects for adding value to corporate enterprises through effective governance, we come to a very simple conclusion. I bastardise a celebrated principal of physics to conclude that both in science and in business a watched particle behaves differently than one that is not watched. "An observed board behaves differently" and is more likely to generate value for corporate owners. [source] What Do Employees Know About Their Pension Plan?INDUSTRIAL RELATIONS, Issue 4 2000Andrew A. Luchak Original survey data based on 529 respondents in a large organization are used to analyze how much employees know about various features of their occupational pension plan. While the level of understanding was quite low among all employees, it was quite high among those for whom the knowledge matters most in terms of their behavioral decision making. Our results show that rather than being optimal labor contracts that workers enter into with full knowledge at the time of employment, pension contracts are more like contingent claims contracts evolving under conditions of uncertainty and incomplete information. [source] The Tax Consequences of Long-Run Pension Policy,JOURNAL OF APPLIED CORPORATE FINANCE, Issue 1 2006Fischer Black A firm's pension fund is legally separate from the firm. But because pension benefits are normally independent of fund performance, pension assets impact the firm very much as if they were firm assets. Because they are worth more when times are good and less when times are bad, common stocks in the pension fund add to the sponsoring firm's leverage. They cause contributions to a pension fund to be high just when the firm can least afford to pay them. Conversely, bonds in the pension fund will make it easier for the firm to avoid default on its own bonds when times are bad all over: The more bonds a pension fund buys, the more the firm can borrow. The tax treatment accorded the pension fund differs notably from that accorded the firm. Some have argued that a firm can capitalize on the difference by accelerating the funding of its pension plan. The benefits of full funding are wasted, however, unless the added contributions to the fund are invested in bonds; higher pension contributions now mean lower contributions later, hence higher taxes later. The benefits come from earning, after taxes, the pretax interest rate on the bonds in the pension fund. If the firm wants to take advantage of the differing tax treatment of bonds without altering the level of its current pension contributions, it can (1) sell stocks in the pension fund and then buy bonds with the proceeds while (2) issuing debt in the firm and buying back its own shares with the proceeds. An investment in the firm's own stock creates no more tax liability than an investment in stocks through the pension fund. [source] Florida's Pension Election: From DB to DC and BackJOURNAL OF RISK AND INSURANCE, Issue 3 2004Moshe A. Milevsky During the year 2002, the State of Florida's 600,000 public employees were given the choice of converting their traditional defined benefit (DB) pension plan into an individual-account defined contribution (DC) plan with full control over asset allocation and investment decisions. To mitigate some of the risk and uncertainty in the decision, the State granted each employee electing the DC plan an additional option to switch back (i.e., change their mind once) at any point prior to retirement. This option has been labeled the 2nd election by the State and the cost of reentry is fixed at the accumulated benefit obligation of their pension entitlement, which is the present value of the life annuity. Our article presents some original analytic insights relating to the optimal time and financial value of this unique 2nd election. Although our model is deterministic in nature, we believe that it provides a number of intuitive insights that are quite robust. Our results can be contrasted with Lachance, Mitchell, and Smetters (2003). We estimate that the increase in retirement wealth that arises from having the 2nd election is equivalent to at most 30 percent in future value, and only when utilized optimally. Furthermore, for most State employees above the age of 45, the 2nd election has little economic value because the DB plan dominates the DC plan from day one. Of course, it remains to be seen what percent of Florida's 600,000 employees will elect to behave rationally with their newfound pension autonomy. [source] Pension Valuation Under Uncertainties: Implementation of a Stochastic and Dynamic Monitoring SystemJOURNAL OF RISK AND INSURANCE, Issue 2 2002Shih-Chieh Chang Financial soundness and funding stability are two critical issues in pension fund management. First, we construct a generalized stochastic model to monitor the solvency risk and cash flow dynamics of the defined benefit pension plan. A semi-Markov process proposed by Dominicis et al. (1991) and Janssen and Manca (1997) is employed in structuring the transition pattern of the plan's population, and the economic-based factors are generated through plausible stochastic processes. Modifications according to classification and movements of the plan member and the plan's turnover pattern are also employed to improve its practical usefulness. Then the actuarial valuations, cash flow analyses, and workforce projection are performed and investigated. Second, we explicitly formulate the plan dynamics and implement the proposed mechanism into a risk management framework for pension management. By employing the stochastic and dynamic approach, the cost factors can be monitored throughout the valuation process. Third, we outline the procedure of implementing the proposed methodology into a monitoring system. Finally, the Taiwan Public Employees Retirement System is simplified to illustrate techniques in achieving risk management goals. [source] Controlling and Motivating the Workforce: Evidence from the Banking Industry in the Late Nineteenth and Early Twentieth CenturiesAUSTRALIAN ECONOMIC HISTORY REVIEW, Issue 3 2000Andrew J. SeltzerArticle first published online: 18 DEC 200 Large banks have a considerable advantage over their smaller rivals because they are better able to diversify their portfolios. However, to achieve this advantage they must overcome agency problems associated with delegating decision making to non-owner employees. This paper uses evidence from the Union Bank of Australia to examine mechanisms used to monitor and motivate workers. Monitoring took the form of rigorous screening, beginning with the hiring process and continuing with frequent performance evaluations. Workers were also given strict rules of behaviour and incentives to supply effort in the form of seniority-based wages, performance-based promotions, and a generous pension plan. [source] Voluntary Contributions to Personal Pension Plans: Evidence from the British Household Panel SurveyFISCAL STUDIES, Issue 4 2000Alessandra Guariglia Abstract In this paper, we use data from the British Household Panel Survey (BHPS) for the years 1992 to 1998 to study the determinants of saving in the form of voluntary contributions to personal pension plans (PPPs). We first estimate a probit model with selection for the probability of making these voluntary contributions. We then estimate a random-effects tobit regression for the amounts contributed and compare the results with those of a similar regression for conventional saving. Our findings suggest that voluntary contributions to PPPs are made essentially for retirement purposes, whereas conventional saving is undertaken for precautionary motives. The former type of saving is thus unlikely to offset the latter completely. [source] The Many Challenges of Pension AccountingACCOUNTING PERSPECTIVES, Issue 2 2009Thomas H. Beechy ABSTRACT Accounting for defined benefit pension plans has long been a major issue in accounting. Standard-setters are grappling with revisions to pension accounting standards, and much change has already occurred in the United Kingdom. This paper identifies and discusses most of the major issues that standard-setters must confront in developing new approaches to financial reporting for pensions. Key issues concern how to report the impact of changes in assumptions, how to recognize pension costs on the balance sheet and income statement, and how to reconcile the differences between accountants' and actuaries' approaches to pensions. Current standards assume that accounting estimates are independent of actuarial assumptions, and yet require a direct comparison of the accounting liability with the pension plan assets, when in fact they are incompatible measures based on differing assumptions and differing methodologies. As well, accounting has been complicit in managers' wishes to hide the volatility inherent in a pension plan investment strategy that focuses on higher-risk equities to fund estimated monetary liabilities that have been discounted at low-risk interest rates. Drawing on studies and research done largely in Europe, this paper attempts to consolidate some of the current thinking on the topic and to propose some preferred approaches to dealing with the problems of pension accounting. [source] Smoothing Mechanisms in Defined Benefit Pension Accounting Standards: A Simulation Study,ACCOUNTING PERSPECTIVES, Issue 2 2009Cameron Morrill ABSTRACT The accounting for defined benefit (DB) pension plans is complex and varies significantly across jurisdictions despite recent international convergence efforts. Pension costs are significant, and many worry that unfavorable accounting treatment could lead companies to terminate DB plans, a result that would have important social implications. A key difference in accounting standards relates to whether and how the effects of fluctuations in market and demographic variables on reported pension cost are "smoothed". Critics argue that smoothing mechanisms lead to incomprehensible accounting information and induce managers to make dysfunctional decisions. Furthermore, the effectiveness of these mechanisms may vary. We use simulated data to test the volatility, representational faithfulness, and predictive ability of pension accounting numbers under Canadian, British, and international standards (IFRS). We find that smoothed pension expense is less volatile, more predictive of future expense, and more closely associated with contemporaneous funding than is "unsmoothed" pension expense. The corridor method and market-related value approaches allowed under Canadian GAAP have virtually no smoothing effect incremental to the amortization of actuarial gains and losses. The pension accrual or deferred asset is highly correlated with the pension plan deficit/surplus. Our findings complement existing, primarily archival, pension accounting research and could provide guidance to standard-setters. [source] The Survival Rate of Defined-Benefit Plans, 1987-1995INDUSTRIAL RELATIONS, Issue 2 2000Richard A. Ippolito We look at the survival rate of defined-benefit pension plans with at least 500 participants over the period 1987,1995. We find that termination in favor of defined-contribution plans is a rare event and that the vast majority of these plans survive, albeit often under a different plan sponsor or in a new merged plan. Indeed, the frequency of mergers is an important feature in the pension market and partially explains the growing number of large defined-benefit plans. [source] A comparative study of the relationship between pension plans and individual savings in Asian countries from an institutional point of viewINTERNATIONAL JOURNAL OF SOCIAL WELFARE, Issue 4 2010Mann Hyung Hur Hur MH. A comparative study of the relationship between pension plans and individual savings in Asian countries from an institutional point of view Int J Soc Welfare 2010: 19: 379,389 © 2009 The Author, Journal compilation © 2009 Blackwell Publishing Ltd and the International Journal of Social Welfare. This study identifies various saving plans used as alternative pension plans in Asian countries and examines the extent to which these saving plans contribute to their pension schemes. Data were collected from six Asian countries: China, Hong Kong, Japan, Korea, Singapore and Taiwan. The comparison concentrates on an examination of differences and similarities in individual countries' privately managed pension schemes and saving plans. This study suggests that a pension system does not have to be a privately managed plan to encourage individual savings. A critical point for individual savings was avoiding a defined benefit plan. On the basis of these findings, a typology of relationships between second and third pillars and provident funds and incentive systems for individual savings was developed. [source] Investing Public Pensions in the Stock Market: Implications for Risk Sharing, Capital Formation and Public Policy in the Developed and Developing WorldINTERNATIONAL REVIEW OF FINANCE, Issue 3 2001Deborah Lucas Concerns that existing public pension systems will be unable to pay benefits to a rapidly ageing population without sharp tax increases, and the prospect of higher average returns on stocks than on government securities, are drawing the attention of policy,makers worldwide to the option of investing public pension assets in stocks. Including stock market investments in public pension plans could improve risk sharing within and between generations, and could perhaps lead to faster market development in some countries. It could also result in excessive risk,taking, higher transactions costs and a false sense of increased financial security. This paper assesses these issues, with an emphasis on the considerations that are of special importance to developing markets. A contrast is drawn between the demographic outlook in East Asia and the major industrialized countries. Some lessons are drawn from the reform experience in Chile and elsewhere in Latin America. [source] CREATING VALUE IN PENSION PLANS (OR, GENTLEMEN PREFER BONDS)JOURNAL OF APPLIED CORPORATE FINANCE, Issue 4 2003Jeremy Gold Pension funds are typically one-half to two-thirds invested in equities because equities are expected to outperform other financial assets over the long term, and the long-term nature of pension fund liabilities seems well suited to absorbing any short-term return volatility. What's more, U.S. GAAP currently makes it possible to take credit in advance for the higher anticipated earnings on equity investments without acknowledging their inherent risk. But by allowing the higher expected returns from stocks to reduce a company's current pension expenses, the accounting treatment conflicts with some very basic principles of finance (in particular, the idea that investors must earn higher returns on riskier investments just to "break even"), conceals systematic biases in the actuarial analysis, and gives managers considerable latitude to manipulate the bottom line. The authors suggest a startlingly different approach. They argue that pension assets should be invested entirely in duration-matched debt instruments for two reasons: (1) to capture the full tax benefits of pre-funding their pension obligations and (2) to improve overall corporate risk profiles by converting general stock market risk into firm-specific operating risk, where corporate managers should have a comparative advantage and can generate real value. Investing exclusively in bonds would take better advantage of the tax-exempt status of pension plans and greatly reduce fund management costs, while at the same time helping o shore up fund quality and sharpening corporate executives' focus on their real operating assets. [source] Guaranteeing Defined Contribution Pensions: The Option to Buy Back a Defined Benefit PromiseJOURNAL OF RISK AND INSURANCE, Issue 1 2003Marie-Eve Lachance After a long commitment to defined benefit (DB) pension plans for U.S. public sector employees, many state legislatures have introduced defined contribution (DC) plans for their public employees. In this process, investment risk that was previously borne by state DB plans has now devolved to employees covered by the new DC plans. In light of this trend, some states have introduced a guarantee mechanism to help protect DC plan participants. One such guarantee takes the form of an option permitting DC plan participants to buy back their DB benefit for a price. This article develops a theoretical framework to analyze the option design and illustrate how employee characteristics influence the option's cost. We illustrate the potential impact of a buy-back option in a pension reform enacted recently by the State of Florida for its public employees. If employees were to exercise the buy-back option optimally, the market value of this option could represent up to 100 percent of the DC contributions over their work life. [source] Son Preference and Access to Social Insurance: Evidence from China's Rural Pension ProgramPOPULATION AND DEVELOPMENT REVIEW, Issue 1 2010Avraham Ebenstein Many scholars argue that the persistence of son preference in China is driven by greater anticipated old-age support from sons than from daughters and the absence of formal financial mechanisms for families to save for retirement. The introduction of a voluntary old-age pension program in rural China in the 1990s presents the opportunity to examine (1) whether parents with sons are less likely to participate in pension plans and (2) whether providing access to pension plans affects parental sex-selection decisions. Consistent with the first hypothesis, we find that parents with sons are less likely to participate in the pension program and have less financial savings for retirement. Consistent with the second hypothesis, we find that an increase in county-level pension program availability is associated with a slower increase in the sex ratio at birth. [source] Pension Plan Funding and Stock Market EfficiencyTHE JOURNAL OF FINANCE, Issue 2 2006FRANCESCO FRANZONI ABSTRACT The paper argues that the market significantly overvalues firms with severely underfunded pension plans. These companies earn lower stock returns than firms with healthier pension plans for at least 5 years after the first emergence of the underfunding. The low returns are not explained by risk, price momentum, earnings momentum, or accruals. Further, the evidence suggests that investors do not anticipate the impact of the pension liability on future earnings, and they are surprised when the negative implications of underfunding ultimately materialize. Finally, underfunded firms have poor operating performance, and they earn low returns, although they are value companies. [source] Naïve Diversification in the Swedish Premium Pension Scheme: Experimental EvidenceAPPLIED PSYCHOLOGY, Issue 3 2009Ted Martin Hedesström In the Swedish Premium Pension Scheme (PPS) all citizens in paid employment allocate part of their public pension savings to mutual funds. In so doing they tend to distribute their choices maximally across different stock fund categories. It is hypothesised that this reflects the naïve application of a variety-inducing diversification heuristic. The results of two experiments simulating choices of fund categories in the PPS support this hypothesis by showing that participating undergraduates chose stock funds investing in overlapping and non-overlapping markets or industries in a way demonstrating failure to take into account covariation among fund returns. Administrators of the PPS and similar defined-contribution pension plans should provide participants with comprehensive advice on how to diversify their investment. Dans le régime de retraite suédois (PPS), tous les citoyens ayant un emploi salarié allouent une part de l'épargne de leur retraite publique à des fonds d'investissements. Ce faisant, ils tendent majoritairement à répartir leurs choix dans différentes catégories de fonds. On a fait l'hypothèse que cela reflète l'application naïve d'une heuristique de la diversification. Les résultats de deux expérimentations simulant des choix entre différentes catégories de fonds pour le PPS confirment cette hypothèse : les sujets (étudiants) ont choisi des fonds en actions et devaient investir sur des marchés ou dans des branches industrielles relevant ou non du même secteur économique et cela d'une façon qui mettait en évidence leur incapacitéà prendre en considération le fait que le retour sur investissement de différents fonds pouvait être lié. Les administrateurs du PPS et de plans de pensions avec versements programmés devraient fournir aux participants des conseils avisés sur la façon de diversifier leur investissement. [source] The Current Situation of Retirement Income Provisions in Japan: Social Security Pension Schemes and Corporate Pension PlansASIAN SOCIAL WORK AND POLICY REVIEW, Issue 2 2009Junichi Sakamoto Japan has been faced with rapid population ageing for decades. This has continuously reduced the level of social security pension benefits. Based on this it is often said that corporate pension plans should play a wider role forward in providing retirement benefits. However, we also have to know that there is a limit to what corporate pension plans can do in place of the social security pension schemes. In this paper we extract lessons from the history of social security pension schemes in our country and try to define the roles of corporate pension plans and social security pension schemes. In conclusion we should keep adequacy of social security pension benefits even if the contribution rate becomes a bit higher. Corporate pension plans just enrich people's life in retirement. We have to remember that corporate pension plans were not certain means for reducing the poverty in old age and that for this reason social security pension schemes by social insurance were invented. [source] The Challenges of Socially Responsible Investment Among Institutional Investors: Exploring the Links Between Corporate Pension Funds and Corporate GovernanceBUSINESS AND SOCIETY REVIEW, Issue 1 2009LAURA ALBAREDA VIVÓ ABSTRACT During the last few decades, globalization of finance markets has come under increasing pressure to manage the many risks that companies face due to the negative impact that certain financial crises have had on securities quoted on the stock exchange. Simultaneously, there is a growing tendency among different institutional investors to take into account nonfinancial aspects,social, environmental, and ethical values,of company management. In this respect, increasing numbers of asset managers are aware of the importance of nonfinancial aspects of company management for finance markets. Asset managers integrate corporate social responsibility, sustainability policies and corporate governance strategies as indicators in risk management and the search for long-term investments. The largest segment of socially responsible investment (SRI) screened and mutual funds are portfolios that are privately managed on behalf of institutions. Socially responsible investors include private and public pension funds, mutual funds, and private accounts that are managed on behalf of institutional investors such as corporations, universities, hospitals, religious institutions, and nonprofit organizations, among others. The aim of this paper is to analyze the development of SRI-screened management corporate pension plans in the Spanish finance market. Spain is one of the European countries with a less developed SRI institutional market. Since SRI is still at the fledgling stage in the Spanish institutional market, this analysis is restricted to the awareness of SRI among a sample of the total number of corporate pension funds or schemes in Spain. The paper concludes with some proposals to encourage wider SRI acceptance and practice in Spain. [source] The Market Value Implications of Post-Retirement Benefit Plans and Plan Surpluses , Canadian EvidenceCANADIAN JOURNAL OF ADMINISTRATIVE SCIENCES, Issue 3 2004Christine I. Wiedman We examine a sample of Canadian firms with defined benefit pension plans over 2000 and 2001, using note disclosures available for the first time in Canada in 2000, and find the following: On average, Canadian investors appear to view the deficit arising from under-funded plans as a liability of the sponsoring firm, but do not appear to view the surplus arising from over-funded plans as an asset of the firm. This finding is consistent with the legal constraints faced by Canadian firms attempting to withdraw a pension surplus from plans. Additionally, we document that post-retirement benefits other than pensions are largely unfunded in Canada, but are not consistently priced by the market. This latter result may be attributable to lack of investor confidence in the estimation of these liabilities. Our findings on defined benefit pension plans surpluses support current International Accounting Standards Board proposals on applying an asset ceiling test to pension surpluses. Résumé La présente étude utilise les informations annexes disponibles au Canada pour la premiére fois en 2000 pour analyser un échantillon d'entreprises canadiennes dotées, entre 2000 et 2001, de régimes de retraite àA prestations déterminées. L'étude révèle qu'en moyenne, les investisseurs canadiens ont tendance à considérer le déficit résultant des régimes sous-capitalisés comme une responsabilité des firmes promotrices; en revanche. ils refusent de considérer l'excédent résultant des régimes surcapitalisés comme un atout pour ces firmes. Cette attitude est attribuable aux contraintes juridiques auxquelles sont soumises les firmes canadiennes qui essaient de puiser le surplus des caisses de retraites. L'étude démontre que hormis les prestations de retraite, les indemnityés à la retraite manquent cruellement de capitaux au Canada et sont sous-évaluées parle marché. Ce dernier résultat peut être attribué au fait que les investisseurs n'ont pas foi en l'évaluation de leur passif. En ce qui conceme les excédents des régimes de retraites à prestations déterminées, nos conclusions vont dans le même sens que les propositions du Comité international de normalisation de la comptabilité qui recommandent I'application d'un test de plafonnement aux excédents des régimes de pensions. [source] Would you like to shrink the welfare state?ECONOMIC POLICY, Issue 32 2001A survey of European citizens The fundamental problems facing European welfare states , high unemployment and unsustainable public pensions plans in particular , have been in the political debate for years, so why have we seen so little reform? To find out, we surveyed the opinions of citizens in France, Germany, Italy and Spain on their welfare states and on various reform options. This is what we found. First, most workers underestimate the costs of public pensions, though they are aware of their unsustainability. Second, the status quo is a majoritarian outcome: a majority of citizens opposes cuts to social security and welfare spending, but also opposes further increases. Since population ageing without reform implies an automatic expansion, our results suggest that most citizens would favour reforms that stabilize but do not shrink the current welfare states. Third, many would welcome changes in the allocation of benefits. A large number of workers in Italy and Germany would be willing to opt out of public pensions and replace them with private pensions, though the details of how this scheme is formulated matter for its popularity. And many Italians and Spaniards would welcome an extension of the coverage of unemployment insurance. Fourth, conflicts over the welfare state are mainly shaped by the economic situation of the respondent, while political ideology plays a limited role. Disagreements are found along three dimensions: young versus old, rich versus poor, and ,outsider' versus ,insider' in terms of labour market status. From a practical point of view, this suggests that there is scope to bundle reforms strategically in order to build a large and mixed coalition of supporters. , Tito Boeri, Axel Börsch-Supan and Guido Tabellini [source] | |||||||||||||