Pension Fund Economics and Finance: Efficiency, Investments and Risk-Taking

2017 | Business & Finance

Pension fund benefits are crucial for the welfare of many in society and pension fund savings have accumulated such huge amounts that they now constitute a major part of world-wide institutional investments. However, the literature on pension fund economics and finance is rather limited, caused, in part, by limited availability of data. This book contributes to this literature and focuses on two important areas: pension fund efficiency and investment behaviour. Inefficiency in pension fund administration and investments have a huge impact on their final benefits, particularly when annual spoilage accumulates over a lifetime. Economies of scale are important and may imply the existence of an optimal scale of pension funds. Complexity of the pension plans may also add to costs, as do higher service levels. If these issues can be addressed, the pension fund efficiency may be improved. The book also explores the decisions behind the allocation of investments to safer and riskier options, the implications of mean reversion in stock prices for pension funds, and compares risk-taking behavior of pension funds with life-insurers.

Finally, this book investigates how pension funds respond to shocks on their wealth, due to unexpected investment returns or changes in life expectancy. This book will be of significant interest to academics, policy-makers and pension fund stakeholders.

Jacob A. Bikker (Author)