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|Controlling the Cost of Minimum Benefit Guarantees in Public Pension Conversions|
National Bureau of Economic Research [NBER]
Feb. 6, 2002
Working paper available from SSRN.com for $5. Excerpt: Unfunded defined-benefit (DB) public pension plans throughout the world are being converted to funded defined-contribution (DC) plans that typically contain a minimum benefit guarantee (DC-MB).... The most common technique is to 'over-fund' the benefit: the contribution rate is set high enough so that the expected benefit is much larger than the guaranteed minimum benefit [but this paper shows the technique is] highly ineffective ...
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