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Efficiency of Pension Funds Management in OECD Countries: Registered Retirement Savings Plan in Canada

Author

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  • Blerina Mucaj

    (Eastern Mediterranean University, North Cyprus)

Abstract

Pension funds collect and invest the money contributed by the employer or the employee, postponing a part of the employee’s total compensation during the working years until retirement. While performing this function, an important issue that deserves special attention is the efficiency of managing these funds. Administrative costs affect this efficiency because every dollar uneconomically spent on administration is a dollar which could possibly go to plant participants. Investigation made in this thesis on the available studies concerning the efficiency of administering pension funds in the OECD area revealed that based on the experience of selected OECD countries and Chile, the cost of managing the retirement funds depends on the structure of the pension scheme. Decentralized pension funds characterized by a high level of services and high marketing costs report higher administrative expenses as compared to centrally managed pension funds which provide a lower level of services incurring very low or no marketing costs at all. Also, this thesis evaluates the efficiency of administering the retirement savings in Canada under the RRSP scheme provided that the account is invested in GICs. The research concludes that all the RRSP administrators obtain large benefits from accessing these long-term funds since they offer identical interest rates on GICs within the RRSP and outside it without imposing any administrative fee on their customers. This zero-level of fees does not have any impact on the future amount of pension benefits.

Suggested Citation

  • Blerina Mucaj, 2006. "Efficiency of Pension Funds Management in OECD Countries: Registered Retirement Savings Plan in Canada," Development Discussion Papers 2006-05, JDI Executive Programs.
  • Handle: RePEc:qed:dpaper:4010
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    References listed on IDEAS

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    Cited by:

    1. Glenn P. Jenkins & Godwin O Olasehinde-Williams & Roya Amel, 2019. "Private Benefits, Fiscal Costs, and Economic Resource Costs of the Private Defined Contribution Pension Systems in Turkey," Development Discussion Papers 2019-02, JDI Executive Programs.

    More about this item

    Keywords

    pension funds; efficiency; administration; administrative costs; RRSP.;

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions

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