Money-Back Guarantees in Individual Pension Accounts: Evidence from the German Pension Reform

Simple item page
dc.contributor.authorMaurer, Raimond
dc.contributor.authorSchlag, Christian
dc.date2023-05-17T22:40:52.000
dc.date.accessioned2023-05-23T00:31:02Z
dc.date.available2023-05-23T00:31:02Z
dc.date.issued2002-01-01
dc.date.submitted2019-09-05T19:59:17-07:00
dc.description.abstractThe German Retirement Saving Act instituted a new funded system of supplementary pensions coupled with a general reduction in the level of state pay-as-you-go old-age pensions. In order to qualify for tax relief, the providers of supplementary savings products must offer a guarantee of the nominal value at retirement of contributions paid into these saving accounts. This paper explores how this “money-back” guarantee works and evaluates alternative designs for guarantee structures, including a life cycle model (dynamic asset allocation), a plan with a pre-specified blend of equity and bond investments (static asset allocation), and some type of portfolio insurance. We use a simulation methodology to compare hedging effectiveness and hedging costs associated with the provision of the moneyback guarantee. In addition, the guarantee has important implications for regulators who must find an appropriate solvency system for such saving schemes.
dc.description.commentsThe published version of this Working Paper may be found in the 2003 publication: The Pension Challenge: Risk Transfers and Retirement Income Security (https://pensionresearchcouncil.wharton.upenn.edu/publications/books/the-pension-challenge-risk-transfers-and-retirement-income-security/).
dc.identifier.urihttps://repository.upenn.edu/handle/20.500.14332/43821
dc.legacy.articleid1450
dc.legacy.fulltexturlhttps://repository.upenn.edu/cgi/viewcontent.cgi?article=1450&context=prc_papers&unstamped=1
dc.rights©2002 Pension Research Council of the Wharton School of the University of Pennsylvania. All Rights Reserved.
dc.source.issue448
dc.source.issueWP2002-11
dc.source.journalWharton Pension Research Council Working Papers
dc.source.statuspublished
dc.subject.otherEconomics
dc.titleMoney-Back Guarantees in Individual Pension Accounts: Evidence from the German Pension Reform
dc.typeWorking Paper
digcom.identifierprc_papers/448
digcom.identifier.contextkey15276164
digcom.identifier.submissionpathprc_papers/448
digcom.typeworkingpaper
dspace.entity.typePublication
relation.isAuthorOfPublicationdfe22ef5-c6ac-46e5-ab0c-198b701595f4
relation.isAuthorOfPublication.latestForDiscoverydfe22ef5-c6ac-46e5-ab0c-198b701595f4
upenn.schoolDepartmentCenterWharton Pension Research Council Working Papers
Files
Original bundle
Now showing 1 - 1 of 1
Thumbnail Image
Name:
PC_chap09.pdf
Size:
191.11 KB
Format:
Adobe Portable Document Format
Download
Collection
Working Papers