Chair: Robert Laslett (Department for Work and Pensions)

Venue:

Butchers' Hall 87 Bartholomew Close London EC1A 7EB

This discussion meeting will start at 13:30.
We look forward to seeing you on Thursday.

Over the last decade, the policy debate on pensions has focused mainly on public pension provision, but recent events have generated an equally strong interest in private pension plans. Falling stock prices have created a gap between promised benefits and available funds and have led to questions about the investment strategy of private pension funds. The recent failure of the Enron Corporation has also highlighted the danger of employees investing in the company’s own stock in their pension plans. When Enron failed, its employees lost not only their jobs but also most of their pension assets. Another recent trend, in both the US and the UK, is the dramatic shift from defined benefit (DB) plans to defined contributions (DC) plans. In DB plans, payments to retirees are defined in advance, with employers bearing the investment risk. DC plans effectively transfer the risk onto employees, by specifying only the contribution to the plan, and making no guarantee about eventual payout in retirement. In CEPR Discussion Paper No. 3955, Timothy Besley and Andrea Prat analyze the interplay of residual claims and control rights in private pensions to show how they relate to decisions about funding, asset allocation, and asset management. The views expressed in the paper are the authors' own and do not reflect the views of CEPR which takes no institutional position.

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