Wharton Pension Research Council Working Papers
 

Title

Retirement Shares Plan: A New Model of Risk Sharing

Document Type

Working Paper

Date of this Version

9-1-2014

Abstract

Investment risk and longevity risk are borne by the plan sponsor in a defined benefit (DB) plan or by the plan participant in a defined contribution (DC) plan. By contrast, our proposed Retirement Shares Plan (RSP) allocates the longevity risk to the plan sponsor and investment risk to the plan participant. The RSP allows the participant sufficient control over the investment risk to tailor that risk to his specific circumstances. This allocation of risk provides predictable and stable cost to the plan sponsor with little chance of unfunded liabilities. The retiree receives lifetime income and potential inflation protection.

Comments

The published version of this Working Paper may be found in the 2016 publication: Reimagining Pensions.

Keywords

investment risk, longevity risk, Retirement Shares Pl

Working Paper Number

WP2014-12

Copyright/Permission Statement

All opinions, errors, findings, interpretations, and conclusions of this paper represent the views of the authors and not those of the Wharton School or the Pension Research Council. © 2014 Pension Research Council of the Wharton School of the University of Pennsylvania. All rights reserved.

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Date Posted: 26 June 2019