The PBGC's Policy Levers and the Pension Plan's Risk-Taking: Should the Premium Be Economically Fair?

19 Pages Posted: 14 Feb 2018

See all articles by Katarzyna Romaniuk

Katarzyna Romaniuk

Université de Paris 1 Panthéon-Sorbonne; Xi'an Jiaotong-Liverpool University (XJTLU)

Date Written: February 2, 2018

Abstract

In the presence of a minimum funding requirement or of a PBGC guarantee that is only partial, an economically fair insurance premium decreases the pension plan's risk-taking. When the regulation's risk-neutrality is sought, a premium lower than the economically fair one should be charged. The paper derives the analytical formula defining the adequate form of the premium.

Keywords: PBGC; policy levers; premium; risk-taking

JEL Classification: G22; G23; G28

Suggested Citation

Romaniuk, Katarzyna, The PBGC's Policy Levers and the Pension Plan's Risk-Taking: Should the Premium Be Economically Fair? (February 2, 2018). Available at SSRN: https://ssrn.com/abstract=3116582 or http://dx.doi.org/10.2139/ssrn.3116582

Katarzyna Romaniuk (Contact Author)

Université de Paris 1 Panthéon-Sorbonne ( email )

17, rue de la Sorbonne
Paris, 75005
France

Xi'an Jiaotong-Liverpool University (XJTLU) ( email )

111 Renai Road, SIP
Suzhou, JiangSu province 215123
China

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