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Author Harrison, J. Michael ♦ Sharpe, William F.
Source CiteSeerX
Content type Text
File Format PDF
Language English
Subject Domain (in DDC) Computer science, information & general works ♦ Data processing & computer science
Subject Keyword Complex Regulatory Procedure ♦ Certain Sense ♦ Pension Fund ♦ Differential Tax Effect ♦ Asset Allocation ♦ Asset Allocation Rule ♦ Optimal Policy ♦ Pension Plan ♦ Naive Policy ♦ Internal Revenue Service ♦ Optimal Funding ♦ Pension Benefit Guaranty Corporation ♦ Definedbenefit Pension Plan ♦ Pension Plan Funding
Description This paper considers a world in which pension funds may default, the cost of the associated risk of default is not borne fully by the sponsoring corporation, and there are differential tax effects. The focus is on ways in which the wealth of the shareholders of a corporation sponsoring a pension plan might be increased if the Internal Revenue Service (IRS) and the Pension Benefit Guaranty Corporation (PBGC) follow simple and naive policies. Under the conditions examined, the optimal policy for pension plan funding and asset allocation is shown to be extremal in a certain sense. This suggests that the IRS and the PBGC may wish to use more complex regulatory procedures than those considered in the paper.
Educational Role Student ♦ Teacher
Age Range above 22 year
Educational Use Research
Education Level UG and PG ♦ Career/Technical Study
Learning Resource Type Article
Publisher Date 1983-01-01
Publisher Institution Financial Aspects of the U.S. Pension System, NBER Project Report