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Pension Conversion, Termination, and Wealth Transfers

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  • Joel T. Harper
  • Stephen D. Treanor

Abstract

type="main" xml:lang="en"> This article explores the motivation to change their defined benefit pension plan by either terminating the plan and replacing it with a defined contribution plan or converting it to a cash balance plan. Using Form 5500 data as well as firm financial data, we find firms wishing to change their defined benefit plans are motivated by potential wealth transfer and tax implications. Firms terminating pension plans tend to have lower potential wealth transfers and lower taxes than firms converting to a cash balance plan, indicating a desire to modify the implicit contract instead of terminating the plan.

Suggested Citation

  • Joel T. Harper & Stephen D. Treanor, 2014. "Pension Conversion, Termination, and Wealth Transfers," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 81(1), pages 177-198, March.
    • Handle: RePEc:bla:jrinsu:v:81:y:2014:i:1:p:177-198
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    Cited by:

    1. Chaudhry, Neeru & Kattamuri, Rohit, 2024. "Do defined contribution plans create value for shareholders?," International Review of Economics & Finance, Elsevier, vol. 91(C), pages 616-633.
    2. Guan, Guohui & Hu, Jiaqi & Liang, Zongxia, 2022. "Robust equilibrium strategies in a defined benefit pension plan game," Insurance: Mathematics and Economics, Elsevier, vol. 106(C), pages 193-217.
    3. Tang, Chun-Hua, 2018. "Subjective value of the guarantees embedded in public cash-balance pension plans," Journal of Pension Economics and Finance, Cambridge University Press, vol. 17(2), pages 231-250, April.
    4. Guohui Guan & Jiaqi Hu & Zongxia Liang, 2021. "Robust equilibrium strategies in a defined benefit pension plan game," Papers 2103.09121, arXiv.org.

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