IDEAS home Printed from https://ideas.repec.org/a/eee/jbrese/v167y2023ics0148296323004599.html
   My bibliography  Save this article

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

Author

Listed:
  • 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
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0148296323004599
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jbusres.2023.114101?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Valdes-Prieto, Salvador, 1994. "Administrative charges in pensions in Chile, Malaysia, Zambia, and the United States," Policy Research Working Paper Series 1372, The World Bank.
    2. Diamond, Peter A., 2002. "Social Security Reform," OUP Catalogue, Oxford University Press, number 9780199247899.
    3. Tuesta, David, 2014. "Factors behind the administrative fees of private pension systems: an international analysis," Journal of Pension Economics and Finance, Cambridge University Press, vol. 13(1), pages 88-111, January.
    4. Modigliani,Franco & Muralidhar,Arun, 2005. "Rethinking Pension Reform," Cambridge Books, Cambridge University Press, number 9780521676533, January.
    5. William Goetzmann, 2003. "Fibonacci and the Financial Revolution," Yale School of Management Working Papers ysm432, Yale School of Management, revised 01 Mar 2004.
    6. Taejin Han & Dariusz Stańko, 2020. "Pension scheme fees and charge ratios in 44 countries: A comparative study," International Social Security Review, John Wiley & Sons, vol. 73(1), pages 99-137, January.
    7. Nicholas Barr & Peter Diamond, 2009. "Reforming pensions: Principles, analytical errors and policy directions," International Social Security Review, John Wiley & Sons, vol. 62(2), pages 5-29, April.
    8. Aaron Gilbert & Ayesha Scott & Shuohan Xu, 2019. "Economies of scale: the case of KiwiSaver fees," Pacific Accounting Review, Emerald Group Publishing Limited, vol. 31(4), pages 695-710, November.
    9. William Goetzmann, 2003. "Fibonacci and the Financial Revolution," Yale School of Management Working Papers ysm432, Yale School of Management, revised 01 Mar 2004.
    10. Waldo Tapia & Juan Yermo, 2008. "Fees in Individual Account Pension Systems: A Cross-Country Comparison," OECD Working Papers on Insurance and Private Pensions 27, OECD Publishing.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lučivjanská, Katarína & Lyócsa, Štefan & Radvanský, Marek & Širaňová, Mária, 2022. "Return adjusted charge ratios: What drives fees and costs of pension schemes?," Finance Research Letters, Elsevier, vol. 48(C).
    2. Sharma, Saurabh & Tomar, Anita & Padaliya, Sanjay Kumar, 2025. "On the evolution and importance of the Fibonacci sequence in visualization of fractals," Chaos, Solitons & Fractals, Elsevier, vol. 191(C).
    3. Sam Flanders & Melati Nungsari & Marcela Parada‐Contzen, 2020. "Pricing schemes and market efficiency in private retirement systems," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(4), pages 1041-1068, August.
    4. Martin S. Feldstein & Jeffrey B. Liebman, 2002. "The Distributional Effects of an Investment-Based Social Security System," NBER Chapters, in: The Distributional Aspects of Social Security and Social Security Reform, pages 263-326, National Bureau of Economic Research, Inc.
    5. Louis Kaplow, 2014. "Government Policy and Labor Supply with Myopic or Targeted Savings Decisions," NBER Chapters, in: Tax Policy and the Economy, Volume 29, pages 159-193, National Bureau of Economic Research, Inc.
    6. Assar Lindbeck & Mats Persson, 2003. "The Gains from Pension Reform," Journal of Economic Literature, American Economic Association, vol. 41(1), pages 74-112, March.
    7. Diana A. Filip & Cyrille Piatecki, 2014. "In defense of a non-newtonian economic analysis," Working Papers hal-00945782, HAL.
    8. Juan F. Jimeno, "undated". "Incentivos y desigualdad en el sistema español de pensiones contributivas de jubilación," Working Papers 2002-13, FEDEA.
    9. Martin Feldstein, 2009. "Reducing the Risk of Investment-Based Social Security Reform," NBER Chapters, in: Social Security Policy in a Changing Environment, pages 201-218, National Bureau of Economic Research, Inc.
    10. Geri, Milva, 2022. "Pension arrangements and economic thinking: unreal assumptions and false predictions in the case of Argentina," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), April.
    11. Martínez Preece Marissa R. & Venegas Martínez Francisco, 2014. "Análisis del riesgo de mercado de los fondos de pensión en México Un enfoque con modelos autorregresivos," Contaduría y Administración, Accounting and Management, vol. 59(3), pages 165-195, julio-sep.
    12. Agar Brugiavini & Franco Peracchi & David A. Wise, 2002. "Pensions and Retirement Incentives. A Tale of Three Countries: Italy, Spain and the USA," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 61(2), pages 131-169, December.
    13. Shah, Hemant, 1997. "Toward better regulation of private pension funds," Policy Research Working Paper Series 1791, The World Bank.
    14. Casarico, Alessandra & Devillanova, Carlo, 2008. "Capital-skill complementarity and the redistributive effects of Social Security Reform," Journal of Public Economics, Elsevier, vol. 92(3-4), pages 672-683, April.
    15. Poteraj, Jarosław, 2008. "Pension systems in 27 EU countries," MPRA Paper 31053, University Library of Munich, Germany.
    16. Brugiavini, Agar & Galasso, Vincenzo, 2004. "The social security reform process in Italy: where do we stand?," Journal of Pension Economics and Finance, Cambridge University Press, vol. 3(2), pages 165-195, July.
    17. Hendrik P. van Dalen, 2019. "Values of Economists Matter in the Art and Science of Economics," Kyklos, Wiley Blackwell, vol. 72(3), pages 472-499, August.
    18. Garcia Huitron, Manuel & Ponds, Eduard, 2016. "Participation and Choice in Funded Pension Plans : Guidance for the Netherlands from Worldwide Diversity," Other publications TiSEM 5351a381-f866-4566-82d8-9, Tilburg University, School of Economics and Management.
    19. Miller, Grant & Valdés, Nieves & Vera-Hernández, Marcos, 2019. "More to Live for: Health Investment Responses to Expected Retirement Wealth in Chile," Research Department working papers 1517, CAF Development Bank Of Latinamerica.
    20. J.A. Bikker, 2013. "Is there an optimal pension fund size? A scale-economy analysis of administrative and investment costs," Working Papers 13-06, Utrecht School of Economics.

    More about this item

    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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jbrese:v:167:y:2023:i:c:s0148296323004599. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jbusres .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.