In this paper, I will introduce several new mechanisms of risk sharing regarding occupational retirement provisions, based on the analysis of present risk sharing between sponsoring employers and plan participants, individual participants and participants as a group, active members and beneficiaries (including deferred members), etc. Among others, I will introduce "Ring-fenced" DB (RfDB) plans, which introduce "share" structure into contributions and reserves, prohibit "lending" from active members to beneficiaries when the plan is in an underfunded status (actuarial deficiency), and allow temporary benefit reductions within prescribed ranges according to the funding level. The risk active members bear will be eased in RfDB plans, and market interest risk sponsoring employers bear will also be eased, because some portion of benefits becomes conditional. RfDB plans allow investments with greater risk tolerance, which may benefit both labor and management from a long-term perspective. It will also be possible to ease funding rules substantially for RfDB plans. It is said that DB plans are on the verge of extinction mainly by the threats from accounting standards. Taking this into account, it is necessary to expand the variation of risk sharing mechanisms in occupational retirement provisions.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
Publisher Info
Paper provided by Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University in its series Discussion Paper with number
304.