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Is my pension fund more expensive? Estimating equivalent assets-based and contribution-based management fees

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  • Mantilla-García, Daniel
  • García-Huitrón, Manuel E.
  • Concha-Perdomo, Alvaro
  • Aldana-Galindo, Julian R.

Abstract

International comparisons of pension fund charges are important in identifying cost- effective structures for funded retirement systems. Heterogeneity in the type of base used to set management fee rates across jurisdictions constitutes a barrier for this type of studies. To overcome this, a closed formula is derived to estimate the contributions-based rate equivalent to a given assets-based rate. Besides enabling international comparisons, the formula allows to calculate the net returns of funds with contribution-based fees. The results of an empirical application in a set of Latin American countries suggest that the conclusions about fee drivers in retirement systems can vary significantly depending on the rate conversion method used.

Suggested Citation

  • Mantilla-García, Daniel & García-Huitrón, Manuel E. & Concha-Perdomo, Alvaro & Aldana-Galindo, Julian R., 2023. "Is my pension fund more expensive? Estimating equivalent assets-based and contribution-based management fees," Journal of Business Research, Elsevier, vol. 167(C).
    • Handle: RePEc:eee:jbrese:v:167:y:2023:i:c:s0148296323004599
    DOI: 10.1016/j.jbusres.2023.114101
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    References listed on IDEAS

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    More about this item

    Keywords

    Retirement systems; Pension reform; Management fee drivers;
    All these keywords.

    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions

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