The Costs of Defined Benefit Pension Plans and Firm Adjustments PDF Download

Author: Burt S. Barnow
Publisher:
ISBN:
Category : Old age pensions
Languages : en
Pages : 68

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Author: DIANE Publishing Company
Publisher: DIANE Publishing
ISBN: 9780788128806
Category : Business & Economics
Languages : en
Pages : 240

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Author: Tae-Nyun Kim
Publisher:
ISBN:
Category :
Languages : en
Pages : 38

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This paper investigates the influence of external cost shock on the speed of adjustment (SOA) toward target capital structure. To look at the impact of an exogenous shock on the speed of adjustment, we employ mandatory contributions (MCs) of defined benefit (DB) pension plans as a measure of the external shock, and find a significant impact of MCs on SOA toward target leverage. This impact of MCs on SOA is negative and more significant for over-levered firms, whereas it is positive but less significant for under-levered firms. This result demonstrates that firms, especially over-levered firms, adjust to their target leverage actively rather than passively. Additionally, we show that this impact of MCs on SOA is heterogeneously determined for the firms with different levels of leverage volatility and managerial entrenchment. Our results are robust when using system GMM estimation to reduce the bias in estimation.

Author: Greg Niehaus
Publisher:
ISBN:
Category : Insurance, Pension trust guaranty
Languages : en
Pages : 44

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Author: Randall D. Weiss
Publisher:
ISBN:
Category : Pension trusts
Languages : en
Pages : 88

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Author: United States. Congress. House. Committee on Education and the Workforce
Publisher:
ISBN:
Category : Business & Economics
Languages : en
Pages : 160

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Author: Zvi Bodie
Publisher: University of Chicago Press
ISBN: 0226062899
Category : Business & Economics
Languages : en
Pages : 466

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This book provides valuable information and analysis to managers, policymakers, and investment counselors in the rapidly expanding field of pension funding. American workers, too, need answers and insights on how to invest their money and plan for their retirement. fifteen of America's leading financial analysts address such pressing questions as -What is the current financial status of the elderly, and how vulnerable are they to inflation? -What is the impact of inflation on the private pension system, and what are the effects of alternative indexing schemes? -What roles can the social security system play in the provision of retirement income? -What is the effect of the tax code and the Employee Retirement Income Security Act of 1974 (ERISA) on corporate pension policy? -How well funded are corporate pension plans, and is a firm's unfunded pension liability fully reflected in the market value of its common stock? Many of the conclusions these experts reach contradict and challenge popular views, thus providing fertile ground for innovation in pension planning.

Author: United States. General Accounting Office
Publisher:
ISBN:
Category : United States
Languages : en
Pages : 238

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Author: Federal Reserve Federal Reserve Board
Publisher: CreateSpace
ISBN: 9781503223714
Category :
Languages : en
Pages : 54

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Many U.S. corporations have frozen defined benefit (DB) pension plans, replacing new DB promises with contributions to defined contribution (DC) plans. We estimate expected DB accruals from the age-service and salary distributions of a large sample of U.S. corporate pension plans with more than 1,000 employees. Comparing the counterfactual DB accruals to the actual increase in 401(k) and other DC contributions for firms that freeze, we find only partial compensation to employees for the lost DB accruals. Net of the increase in total DC contributions, firms save 2.7-3.6% of payroll per year, and over a 10-year horizon they save 3.1% of total firm assets. Workers would have to value the structure, choice, flexibility, or portability of DC plans by at least this much more to experience welfare gains from freezes. The forgone accruals and net cost effects are initially largest for older employees but over time become largest for middle-aged employees who plan to stay with the firms until retirement. Furthermore, the probability that a firm freezes a pension plan is positively related to the value of new accruals as a share of firm assets. While there are differences in the age-service distributions of firms that freeze versus those that do not, we find that the differential accrual effect is largely driven by differences in benefit factors and the relative importance of labor in the freeze firm's production function. The results overall support the hypothesis that pension freezes affect overall compensation and therefore that they change compensation costs relative to a worker's marginal product.

Author: President's Private Sector Survey on Cost Control (U.S.). Management Office
Publisher:
ISBN:
Category : Civil service
Languages : en
Pages : 294

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