IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

Evaluating the Design of Private Pension Plans: Costs and Benefits of Risk-Sharing

Listed author(s):
  • Hans J. Blommestein


  • Pascal Janssen


  • Niels Kortleve


  • Juan Yermo


The principal purpose of this paper is to analyse the trade-off between the uncertainty in contributions on the one hand and benefits on the other that is embedded in different pension arrangements. The paper employs the funding ratio (ratio of assets to liabilities) and the replacement rate (ratio of benefits to salaries) as key criteria for evaluating the risk sharing characteristics of a private pension plan from the perspective of the plan member. The stochastic simulations performed show that hybrid plans (those in between traditional DB and individual DC) appear to be more efficient and sustainable forms of risk sharing than either of the other two. Of the three main hybrid plans analysed, conditional indexation plans appear to have the greatest potential as sustainable forms of risk sharing. Évaluer la conception des plans de pension privés : coûts et avantages du point de vue du partage des risques Le principal objectif de ce document est d'analyser l'arbitrage entre le degré de certitude (d'incertitude) des cotisations, d'une part, et des prestations, d'autre part, inscrit dans les différents systèmes de pension. Le coefficient de capitalisation (rapport des actifs aux engagements) et le taux de remplacement (rapport entre les prestations et le salaire) sont les critères clés considérés pour évaluer les caractéristiques en termes de partage des risques des plans de pension privés du point de vue de l'adhérent à un plan. Les simulations stochastiques réalisées montrent que les plans hybrides (plans qui se situent entre les traditionnels plans à prestations définies et les plans à cotisations définies individuels) semblent être une forme de partage des risques plus efficiente et plus viable que les deux autres. Parmi les trois grands types de plans hybrides analysés, les plans à indexation conditionnelle semblent les plus aptes à assurer un partage des risques de façon pérenne.

If you experience problems downloading a file, check if you have the proper application to view it first. 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.

File URL:
Download Restriction: no

Paper provided by OECD Publishing in its series OECD Working Papers on Insurance and Private Pensions with number 34.

in new window

Date of creation: 01 Mar 2009
Handle: RePEc:oec:dafaab:34-en
Contact details of provider: Postal:
2 rue Andre Pascal, 75775 Paris Cedex 16

Phone: 33-(0)-1-45 24 82 00
Fax: 33-(0)-1-45 24 85 00
Web page:

More information through EDIRC

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:oec:dafaab:34-en. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()

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 references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.

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

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.