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S O C I A L S E C U R I T Y , P E N S I O N S &
R E T I R E M E N T I N C O M E A B S T R A C T S
Accepted Paper Series
Vol. 2, No. 8: September 8, 2005
A C C E P T E D P A P E R A B S T R A C T S
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“The Effects of Employer Matching in 401(k) Plans”
Industrial Relations, Vol. 44, No. 3, pp. 525-549, July
2005
BY: WILLIAM E. EVEN
Miami University of Ohio
Department of Economics
Institute for the Study of Labor (IZA)
DAVID A. MACPHERSON
Florida State University
Department of Economics
Institute for the Study of Labor (IZA)
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=739940
Contact: WILLIAM E. EVEN
Email: Mailto:evenwe@muohio.edu
Postal: Miami University of Ohio
Department of Economics
208 Laws Hall
Oxford, OH 45056 UNITED STATES
Phone: 513-529-2865
Fax: 513-529-6992
Co-Auth: DAVID A. MACPHERSON
Email: Mailto:DMACPHER@MAILER.FSU.EDU
Postal: Florida State University
Department of Economics
Tallahassee, FL 30306-2180 UNITED STATES
ABSTRACT:
This paper uses data from the April 1993 pension supplements to
the Current Population Survey (CPS) to investigate the impact of
employer matching and employee tenure on participation levels in
401(k) plans. While earlier studies examine similar issues, this
study makes several advances. First, consistent with the theory
that employers may use matching contributions to satisfy
nondiscrimination rules, the study shows that correcting for the
endogeneity of employer matching substantially increases the
estimated effect of matching on participation levels. Second,
the study provides evidence that the large positive association
between employee tenure and 401(k) participation is because
“stayers” tend to be “savers”.
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“Pension Funding, Insolvency Risk and the Rating of Corporations”
Schmalenbach Business Review, Special Issue 2, 2005
BY: WOLFGANG GERKE
University of Erlangen-Nürnberg
FERDINAND MAGER
Independent
Contact: WOLFGANG GERKE
Email: Mailto:info@prof-gerke.de
Postal: University of Erlangen-Nürnberg
Universitatsstrabe 40
D-91054 Erlangen, GERMANY
Co-Auth: FERDINAND MAGER
Email: Mailto:x@x.de
Postal: Independent
No Address Available,
ABSTRACT:
We examine the probability of insolvency of companies with
pension provisions compared to companies that use pension funds.
We analyze the risk and return characteristics of the different
cases. We perform various simulations for different scenarios to
finally evaluate the different methods of international rating
agencies for pension obligations. We find that none of the
approaches of the international rating agencies is appropriate,
as they fail to acknowledge the risk of investing pension fund
assets on the capital market on an ex ante basis. S&P correctly
classifies pension provisions but fails to account for the
investment risk of pension funds, which may lead to distortions
in international comparisons. Moody’s and Fitch also do not
include investment risks but pragmatically compensate for
different risk profiles by classifying a portion of pension
provisions as equity.
JEL Classification: C15, G23, G31, G32
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“Pension Funding Reform: It’s Time to Get the Rules Right (Part
1)”
Tax Notes, Vol. 108, No. 9, August 22, 2005
BY: KATHRYN J. KENNEDY
John Marshall Law School
Contact: KATHRYN J. KENNEDY
Email: Mailto:7kennedy@jmls.edu
Postal: John Marshall Law School
315 South Plymouth Court
Chicago, IL 60604 UNITED STATES
Phone: 312-427-2737 ext. 515
ABSTRACT:
In this two-part article, the author explains how and why
ERISA’s historical pension funding rules – although
well-intentioned – nevertheless led employers, such as United
Airlines’ parent UAL Corp., to have seriously underfunded
pension plans, and the Pension Benefit Guaranty Corp. to assume
billions of dollars of those unfunded liabilities. Before future
pension reform measures should be considered, Kennedy believes
that we should learn from the past. Mistakes created through
legislative rules should not be repeated, but instead their
lessons should help forge effective pension funding reforms.
The second part of the article will discuss various
legislative proposals pending before Congress and the policy
considerations relevant to those proposals, in light of the
historical mistakes that should be avoided in impending
legislation.
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“The Economic Inefficiency of Secrecy: Pension Fund Investors’
Corporate Transparency Concerns”
Journal of Business Ethics, Forthcoming
BY: TESSA M. HEBB
University of Oxford
School of Geography and the Environment
Contact: TESSA M. HEBB
Email: Mailto:thebb@ouce.ox.ac.uk
Postal: University of Oxford
School of Geography and the Environment
Mansfield Road
Oxford OX1 3TB, UNITED KINGDOM
ABSTRACT:
In the wake of recent corporate scandals, this paper traces the
growing power of pension funds to provide managerial oversight
of the firms they hold in their investment portfolios.
Increasingly pension funds are exercising their legitimate
rights as owners to raise the corporate governance standards of
the firms they invest in.
Within corporate governance generally, pension funds are
shifting their attention away from managerial accountability and
toward measures that increase transparency in firm-level
decision-making. Pension funds use transparency to ensure that
shareholders are the primary interest being served by the firm.
Transparency not only aligns managers and owners, it also raises
issues of firm behaviour that allow other stakeholders to engage
the corporation more broadly. I contend that secrecy is
economically inefficient. When organisations are opaque and
interests are secret, decision-making can and does distort
efficiency.
I examine recent pension fund corporate governance campaigns
with particular reference to the California Public Employees
Retirement System.