Summary |
This book addresses the major supply and demand challenges affecting the quasi-market of mandatory defined contributions (DC) plans, including the role of market power and behavioral inertia. It underlines the inadequacy of several policy interventions and highlights the key risks related to DC plans. Major added value is provided through its recommendations, which address flat fees and related subsidies, hybrid organizational models (combining procurement and quasi-market models), cost-based tariffs, life-cycle default investment options, and targeted annuitiza-tion funds. I strongly recommend that all pension stakeholders read this book.
Against the backdrop of the global financial crisis, this volume takes a much needed book at how the market for defined contribution pensions has evolved and how it can be strengthened, with careful attention to tradeoffs between risk and return, fees, bundling of services, and the ultimate outcome-retirement security. Policy makers and pension design analysts around the world will find this book essential in charting a path that balances equity, efficiency, and transparency in the pension marketplace.
Though defined contribution pension systems have addressed fiscal, intergenerational, and financial issues, the limited involvement of consumers in this market has caused strong market power, excessive marketing expenses, and high administrative fees by pension firms. Essential to understand the pending challenges of recent pension reforms, this book succeeds in disentangling microeconomic and industrial organization predicaments, while proposing innovative alternatives to address these concerns. A must read for policy makers and academics working in the area of pension fund administration.
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