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Pension Liabilities: Fear Tactics and Serious Policy


  • David Rosnick
  • Dean Baker


This working paper argues that pension funds should adopt a funding principle that is consistent with a return on holdings conditional on the state of the stock market. As will be shown, the expected “conditional rate of return” used in making this assessment will vary depending on the current ratio of stock prices to trend corporate earnings. This funding rule will lead to a more even flow of contributions into the fund than a rule that is based on a fixed return for assets over time.

Suggested Citation

  • David Rosnick & Dean Baker, 2012. "Pension Liabilities: Fear Tactics and Serious Policy," CEPR Reports and Issue Briefs 2012-02, Center for Economic and Policy Research (CEPR).
  • Handle: RePEc:epo:papers:2012-02

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    References listed on IDEAS

    1. Kartik B. Athreya & Devin Reilly & Nicole B. Simpson, 2010. "Earned income tax credit recipients: income, marginal tax rates, wealth, and credit constraints," Economic Quarterly, Federal Reserve Bank of Richmond, issue 3Q, pages 229-258.
    2. Eissa, Nada & Hoynes, Hilary, 2011. "Redistribution and Tax Expenditures: The Earned Income Tax Credit," National Tax Journal, National Tax Association, vol. 64(2), pages 689-729, June.
    3. Jesse Rothstein, 2010. "Is the EITC as Good as an NIT? Conditional Cash Transfers and Tax Incidence," American Economic Journal: Economic Policy, American Economic Association, vol. 2(1), pages 177-208, February.
    4. Rebecca Ray & Janet C. Gornick & John Schmitt, 2008. "Parental Leave Policies in 21 Countries: Assessing Generosity and Gender Equality," CEPR Reports and Issue Briefs 2008-23, Center for Economic and Policy Research (CEPR).
    5. Hye Jin Rho & John Schmitt, 2010. "Health-Insurance Coverage Rates for US Workers, 1979-2008," CEPR Reports and Issue Briefs 2010-06, Center for Economic and Policy Research (CEPR).
    6. Mary Gregory & Miriam Beblo & Wiemer Salverda & Ioannis Theodossiou, 2009. "Introduction," Oxford Economic Papers, Oxford University Press, vol. 61(suppl_1), pages 1-10, April.
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    Cited by:

    1. Dean Baker & Nick Buffie, 2015. "Pension Funding and the Economy: Would “Proper” Funding Cost Jobs?," CEPR Reports and Issue Briefs 2015-22, Center for Economic and Policy Research (CEPR).

    More about this item


    pensions; retirement;

    JEL classification:

    • G - Financial Economics
    • G2 - Financial Economics - - Financial Institutions and Services
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • J - Labor and Demographic Economics
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions

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