The Impact of Risk Aversion and Density of Contribution on the Comparison of Administrative Charges in Individual Account Pension Systems
74 Pages Posted: 13 Jun 2014
Date Written: January 22, 2014
Abstract
This article studies the effect of risk aversion and density of contribution on the comparison of proportional charges on flow (contributions) and balance (assets) during the accumulation phase of a defined contribution pension under the system of individual accounts. Theoretical results are shown when the comparison is done through expected utility of terminal wealth, expected terminal wealth and the inverse of its coefficient of variation. We also present numerical results when the methodology is applied to the Peruvian Private Pension System.
Keywords: Pension fund, defined benefit, individual account, charge on balance, charge on flow, density of contribution
JEL Classification: G23
Suggested Citation: Suggested Citation