Risk and rationality in occupational pensions : defined-benefit vs. defind-contribution from a corporate standpoint

摘要

In Norway, pensions are conceived to be a right, and perhaps not an earned benefit. Changes in the demographic structure in the Norwegian population have produced a need for pension accumulation outside the public scope. This is taken care of by the component anchored in an employment relationship of the pension mix. This thesis occupies itself with the market for occupational pensions in Norway. Specifically, it is occupied with an organization where the employees are enrolled in a defined-benefit pension plan with the Norwegian Public Service Pension Fund. The thesis seeks to view the uncertainties and risks associated with pension accumulation from a corporate perspective, and provides less attention to the pension plan beneficiaries and regulatory frameworks affecting financial service providers. Ideal types are constructed in order to produce variation and comparative outcomes between the two available pension designs, as well as to identify how legislative caps affect pension accumulation. The analysis and discussions provide conclusions that are in line with recent literature. Defined-contribution pension plan design provides full certainty for the employers through transfer of risk to the employees. In addition, the thesis provides arguments contrary to popular belief. Defined-contribution pension plans may very well produce identical lifelong annual retirement income to a defined-benefit design. All it takes are certain returns to capital and substantial annual accumulation rates from the sponsoring organization. This implies that with certain characteristics, a best scenario outcome can be produced for both participants in the employment relationship.