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The Political Economy of Public Pensions: Pension Funding, Governance, and Fiscal Stress

Author

Listed:
  • Ping-Lung Hsin

    (Adjunct Associate Professor, Institute for Labor Research, National Chengchi University.)

  • Olivia Mitchell

    (Professor, The Wharton School, Philadelphia.)

Abstract

The purpose of this paper is to describe and evaluate how public sector defined benefit pension plans are managed, and to assess possible implications of different pension management styles for promised pension benefits. The authors explore the actuarial and economic assumptions employed by public pension managers when they set funding targets, using a new survey of state and local pension plans in the United States. The analysis shows that key assumptions under the control of public pension plan trustees are sensitive to factors in the pension environment. An implication of the paper is that public pension funding patterns may become more sensitive to strategic selection of interest role and other key assumptions as public sector budgets are subjected to fiscal pressures, and when they are managed by participant-run boards.

Suggested Citation

  • Ping-Lung Hsin & Olivia Mitchell, 1994. "The Political Economy of Public Pensions: Pension Funding, Governance, and Fiscal Stress," Revista de Analisis Economico – Economic Analysis Review, Universidad Alberto Hurtado/School of Economics and Business, vol. 9(1), pages 151-168, June.
    • Handle: RePEc:ila:anaeco:v:9:y:1994:i:1:p:151-168
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    Citations

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    Cited by:

    1. Arrau, Patricio & Schmidt-Hebbel, Klaus, 1995. "Pensions systems and reform : country experiences and research issues," Policy Research Working Paper Series 1470, The World Bank.
    2. World Bank, 2002. "Reducing Vulnerability and Increasing Opportunity : Social Protection in the Middle East and North Africa," World Bank Publications - Books, The World Bank Group, number 14255.
    3. Olivia S. Mitchell & David McCarthy & Stanley C. Wisniewski & Paul Zorn, "undated". "Developments in State and Local Pension Plans," Pension Research Council Working Papers 99-4, Wharton School Pension Research Council, University of Pennsylvania.
    4. Sebastian Edwards, 1998. "The Chilean Pension Reform: A Pioneering Program," NBER Chapters, in: Privatizing Social Security, pages 33-62, National Bureau of Economic Research, Inc.
    5. Olivia S. Mitchell & John Piggott & Cagri Kumru, 2008. "Managing Public Investment Funds: Best Practices and New Challenges," NBER Working Papers 14078, National Bureau of Economic Research, Inc.
    6. Michael Useem & Olivia S. Mitchell, "undated". "Holders of the Purse Strings: Governance and Performance of Public Retirement Systems," Pension Research Council Working Papers 2000-3, Wharton School Pension Research Council, University of Pennsylvania.
    7. Olivia S. Mitchell & Roderick Carr, "undated". "State and Local Pension Plans," Pension Research Council Working Papers 95-13, Wharton School Pension Research Council, University of Pennsylvania.
    8. Olivia S. Mitchell, "undated". "Developments in Pensions," Pension Research Council Working Papers 98-4, Wharton School Pension Research Council, University of Pennsylvania.
    9. Olivia S. Mitchell, 1998. "Administrative Costs in Public and Private Retirement Systems," NBER Chapters, in: Privatizing Social Security, pages 403-456, National Bureau of Economic Research, Inc.
    10. Olivia S. Mitchell, "undated". "Building an Environment for Pension Reform in Developing Countries," Pension Research Council Working Papers 97-7, Wharton School Pension Research Council, University of Pennsylvania.
    11. Olivia S. Mitchell, "undated". "International Models for Pension Reform," Pension Research Council Working Papers 98-5, Wharton School Pension Research Council, University of Pennsylvania.

    More about this item

    JEL classification:

    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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