金融中介与资本市场课件：CH08 Pension Funds

1、Pension FundsChapter 8Pension PlansA fund established for the eventual payment of retirement benefitsMost developed countries a “3 legged” systemGovernment sponsored plansEmployer sponsored plansIndividual sponsored plansCopyright 2010 Pearson Education, Inc. Publishing as Prentice Hall2Copyright 20

2、10 Pearson Education, Inc. Publishing as Prentice Hall3Employer Sponsored PlansPlan SponsorsCorporate plansPublic plans Union plansCopyright 2010 Pearson Education, Inc. Publishing as Prentice Hall4Largest PlansCopyright 2010 Pearson Education, Inc. Publishing as Prentice Hall5Largest PlansCopyright

3、 2010 Pearson Education, Inc. Publishing as Prentice Hall6Largest PlansFunding of Pension PlansMost employer sponsored pension plans are funded by contributions made by the employer and the employeeEmployer contribution is a form of remunerationBenefits vest after the employee completes a minimum nu

4、mber years of serviceIndividual pension plans are funded solely by the individualCopyright 2010 Pearson Education, Inc. Publishing as Prentice Hall7Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall8Types of Employer Sponsored Pension PlansDefined Benefit PlansDefined Contribution Pl

5、ansHybrid PlansCopyright 2010 Pearson Education, Inc. Publishing as Prentice Hall9Defined Contribution Plans Sponsor makes contributions on behalf of participant Contributions typically % of salaryParticipant typically also makes contributionsParticipant decides how his/her pension assets are invest

6、edDefined Contribution Plans Sponsor does not guarantee any certain amount at retirementUpon retirement a lump sum has accumulated for the benefit of the participant the size of which depends on the growth of contributionsParticipant periodically withdraws from the lump sum to fund retirement or use

7、s the lump sum to buy an annuity that pays a stream of cash flows until deathCopyright 2010 Pearson Education, Inc. Publishing as Prentice Hall10Defined Contribution Plans For sponsor, this type plan has fewest costs, administration, and risksFor participant, plan may be attractive because they cont

8、rol how pension monies are investedBut this is “two edged sword”!Employee has risk because there is no guaranteed amount at retirementCopyright 2010 Pearson Education, Inc. Publishing as Prentice Hall11Defined Benefit PlansBoth sponsor and participant make contributions to the planParticipant contri

9、bution typically % of salarySponsor guarantees a fixed dollar amount payable monthly to participants upon retirementFixed dollar amount determined by formula based on length of service and earningsPension obligations are debt obligation of sponsorCopyright 2010 Pearson Education, Inc. Publishing as

10、Prentice Hall12Defined Benefit PlansSponsor contribution must be sufficient to ensure plan can meet pension obligationsFor sponsor, this type of plan has greatest costs, administration and risksFor participant, this type of plan has least amount of riskDB Plans are gradually being replaced by DC Pla

11、nsCopyright 2010 Pearson Education, Inc. Publishing as Prentice Hall13Hybrid PlansCombines feature of both basic types of planBoth sponsor and participant contributeSponsor guarantees a minimum level of retirement benefitIf plan assets insufficient to achieve minimum level of benefits, sponsor remed

12、ies the deficitRisks are shared by participant and sponsorCopyright 2010 Pearson Education, Inc. Publishing as Prentice Hall14InvestmentsPension plans invest in equities, fixed income and “real” assetsAsset allocation is the most important aspect of investing strategiesMost pension plans are exempt

13、from paying income taxesCopyright 2010 Pearson Education, Inc. Publishing as Prentice Hall15Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall16Asset AllocationCopyright 2010 Pearson Education, Inc. Publishing as Prentice Hall17Management of Employer Sponsored Pension FundsPlan Spons

14、orsAsset Management FirmsConsulting FirmsAsset Management FirmsHired to manage plan assets on behalf of sponsor/participantFirms providing such service include: insurance companies, banks, investment companiesManagers typically paid an annual fee based on Assets Under Management (AUM), typically1% and lessCopyright 2010 Pearson Education, Inc. Publishing as Prentice Hall18Copyright 2010 Pearson E