Premiums of the Pension Benefit Guarantee Corporation and risk-taking by pension plans

Katarzyna Romaniuk

doi:10.1016/j.qref.2019.01.003

Premiums of the Pension Benefit Guarantee Corporation and risk-taking by pension plans

Katarzyna Romaniuk

Department of Finance

Research output: Contribution to journal › Article › peer-review

1 Citation (Scopus)

Abstract

This paper focuses on defining Pension Benefit Guarantee Corporation (PBGC) premiums. We propose an analytical framework to analyze the effect of premium form on risk-taking by sponsoring firms in their pension plans. We show that risk-taking increases (decreases) when a firm's probability of bankruptcy is superior (inferior) to the sum of the underfunding proportion considered in the premium and of the minimum funding requirement parameters, this sum being divided by the level of the guarantee.

Original language	English
Pages (from-to)	301-307
Number of pages	7
Journal	Quarterly Review of Economics and Finance
Volume	74
DOIs	https://doi.org/10.1016/j.qref.2019.01.003
Publication status	Published - Nov 2019

Keywords

Defined benefit pension plan
PBGC
Policy levers
Premium
Risk-taking

Access to Document

10.1016/j.qref.2019.01.003

Cite this

@article{0e5866d637ba405cb8f258c9d321fca5,

title = "Premiums of the Pension Benefit Guarantee Corporation and risk-taking by pension plans",

abstract = "This paper focuses on defining Pension Benefit Guarantee Corporation (PBGC) premiums. We propose an analytical framework to analyze the effect of premium form on risk-taking by sponsoring firms in their pension plans. We show that risk-taking increases (decreases) when a firm's probability of bankruptcy is superior (inferior) to the sum of the underfunding proportion considered in the premium and of the minimum funding requirement parameters, this sum being divided by the level of the guarantee.",

keywords = "Defined benefit pension plan, PBGC, Policy levers, Premium, Risk-taking",

author = "Katarzyna Romaniuk",

note = "Publisher Copyright: {\textcopyright} 2019 Board of Trustees of the University of Illinois",

year = "2019",

month = nov,

doi = "10.1016/j.qref.2019.01.003",

language = "English",

volume = "74",

pages = "301--307",

journal = "Quarterly Review of Economics and Finance",

issn = "1062-9769",

}

TY - JOUR

T1 - Premiums of the Pension Benefit Guarantee Corporation and risk-taking by pension plans

AU - Romaniuk, Katarzyna

PY - 2019/11

Y1 - 2019/11

N2 - This paper focuses on defining Pension Benefit Guarantee Corporation (PBGC) premiums. We propose an analytical framework to analyze the effect of premium form on risk-taking by sponsoring firms in their pension plans. We show that risk-taking increases (decreases) when a firm's probability of bankruptcy is superior (inferior) to the sum of the underfunding proportion considered in the premium and of the minimum funding requirement parameters, this sum being divided by the level of the guarantee.

AB - This paper focuses on defining Pension Benefit Guarantee Corporation (PBGC) premiums. We propose an analytical framework to analyze the effect of premium form on risk-taking by sponsoring firms in their pension plans. We show that risk-taking increases (decreases) when a firm's probability of bankruptcy is superior (inferior) to the sum of the underfunding proportion considered in the premium and of the minimum funding requirement parameters, this sum being divided by the level of the guarantee.

KW - Defined benefit pension plan

KW - PBGC

KW - Policy levers

KW - Premium

KW - Risk-taking

UR - http://www.scopus.com/inward/record.url?scp=85064199151&partnerID=8YFLogxK

U2 - 10.1016/j.qref.2019.01.003

DO - 10.1016/j.qref.2019.01.003

M3 - Article

AN - SCOPUS:85064199151

SN - 1062-9769

VL - 74

SP - 301

EP - 307

JO - Quarterly Review of Economics and Finance

JF - Quarterly Review of Economics and Finance

ER -

Premiums of the Pension Benefit Guarantee Corporation and risk-taking by pension plans

Abstract

Keywords

Access to Document

Other files and links

Fingerprint

Cite this