Analysis of Pension Funding Under Erisa / Jeremy I. Bulow.

Format:

Book

Author/Creator:

Bulow, Jeremy I.

Summers, Lawrence H., author.

Contributor:

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w0402.

NBER working paper series no. w0402

Language:

English

Subjects (All):

Retirement.

Retirement--Planning.

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1979.

Cambridge, Mass. : National Bureau of Economic Research, 1979.

Summary:

This paper begins by describing the tax, funding, and insurance aspects of the Pension Reform Act of 1974. Next, the implications of those laws are analyzed from the standpoint of the funding decision of the firm. The tax advantage of early funding appears to be quite small. Because there are insurance and other reasons (related to asymmetries in the pension law) why firms might wish to underfund their plans, there is no good reason to expect all firms to fund to the limit. The final section discusses the magnitude of the firms' unfunded pension liability, properly defined. This debt is shown to be quite small. A major reason for this is the substantial increase in long- term nominal interest rates, which have decreased the present value of accrued benefits and, equally, unfunded pension obligations.

Notes:

Print version record

November 1979.