Why Do Firms Offer Risky Defined-Benefit Pension Plans?

Why Do Firms Offer Risky Defined Benefit Pension Plans?

Even risky pension sponsors could offer essentially riskless pension promises by contributing a sufficient level of resources to their pension trust funds and by investing those resources in fixed-income securities designed to deliver their payoffs just as pension obligations are coming due. However, almost no firm has chosen to fund its plan in this manner. We study the optimal funding choice ...

Why Do High-Tech Firms Offer Perks at Work?

Why do high-tech firms offer perks at work?

Using novel data collected from a career intelligence website, we study whether and why high-tech firms rely more heavily on non-wage benefits, such as free meals, transportation subsidies, and athletic facilities (“work-related perks”). We find that employers engaged in IT innovation are more likely to offer work-related perks, but not more traditional non-wage benefits such as health insuranc...

Getting Feedback on Defined Contribution Pension Plans

The financial market’s performance plays an important role in the retirement date of a DC pension plan holder. Consequentially, it could potentially also influence the labour force structure of countries that adopt DC features in their public and private pension systems. Numerous studies are motivated, however, by the theory that financial markets are affected by a country’s demographics, makin...

An Analysis of Risk-Taking Behavior for Public Defined Benefit Pension Plans

This paper investigates the determinants of public pension plan risk-taking behavior using the percentage of total plan assets invested in the equity markets and the pension asset beta as measures of investment risk. We find that government accounting standards strongly affect public fund investment risk, as higher return assumptions (used to discount pension liabilities) are associated with hi...