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Multiperiod Pension Plans and ERISA

Author

Listed:
  • Langetieg, T. C.
  • Findlay, M. C.
  • da Motta, L. F. J.

Abstract

Corporate pension plans represent a large and growing force in the capital market. Their promised benefits comprise a large portion of the expected retirement income of millions of employees. Because of this importance, and because of some widely publicized abuses and scandals, these plans were the subject of increased governmental regulation in the 1970s. One outgrowth of this has been the Employee Retirement Income Security Act (ERISA) under which the Pension Benefit Guarantee Corporation (PBGC) provides insurance of pension benefits. The objective of this paper is to develop a multiperiod model of the pension plan in order (1) to evaluate the robustness of prior analyses of the wealth transfers caused by the passage of ERISA among workers, firms, and the PBGC; (2) to characterize the nature of a PBGC insurance scheme which could, if it were so desired, reduce the potential liability of the PBGC; and (3) to serve as a prototype for modeling the multiperiod pension plan.

Suggested Citation

  • Langetieg, T. C. & Findlay, M. C. & da Motta, L. F. J., 1982. "Multiperiod Pension Plans and ERISA," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 17(4), pages 603-631, November.
    • Handle: RePEc:cup:jfinqa:v:17:y:1982:i:04:p:603-631_01
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    Citations

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    Cited by:

    1. Cotter, John & Blake, David & Dowd, Kevin, 2006. "Financial Risks and the Pension Protection Fund: Can it Survive Them?," MPRA Paper 3498, University Library of Munich, Germany.
    2. Zvi Bodie, 1989. "Pension Funds and Financial Innovation," NBER Working Papers 3101, National Bureau of Economic Research, Inc.
    3. John Cotter & David Blake & Kevin Dowd, 2012. "What Should Be Done About The Underfunding of Defined Benefit Pension Schemes?," Working Papers 201202, Geary Institute, University College Dublin.
    4. Alan Marcus, 1987. "Corporate Pension Policy and the Value of PBGC Insurance," NBER Chapters, in: Issues in Pension Economics, pages 49-80, National Bureau of Economic Research, Inc.
    5. Webb, David C., 2004. "Sponsoring company finance and investment and defined benefit pension scheme deficits," LSE Research Online Documents on Economics 24699, London School of Economics and Political Science, LSE Library.
    6. Lim, Terence & Lo, Andrew W. & Merton, Robert C. & Scholes, Myron S., 2006. "The Derivatives Sourcebook," Foundations and Trends(R) in Finance, now publishers, vol. 1(5–6), pages 365-572, April.

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