Title
Contents
The Authors 5
Summary 6
1. Introduction 10
2. The economics of pensions 11
2.1 Pension schemes as an instrument of human resources 12
3. Risk-sharing in Defined Benefit pensions 14
3.1 Inter-generational smoothing 15
3.2 Benefit flexibility 17
4. The public interest in pensions 18
5. The economics of pension regulation 20
5.1 Information 20
5.2 Prudential regulation 21
5.3 Product design 22
5.4 The voluntary nature of pensions 24
6. The regulation of retail financial products 25
6.1 The marketing of financial products 25
6.2 Design of financial products 26
6.3 Prudential regulation 26
7. Principles of pension regulation 28
8. Implications for regulating our current pension system 30
8.1 Defined Contribution pension plans 30
8.1.1 The marketing of pensions 30
8.1.2 Pension scheme design 30
8.1.3 Prudential regulation 31
8.2 Defined Benefit pension plans 31
8.2.1 The marketing of pensions 31
8.2.2 Pension scheme design 32
8.2.3 Prudential regulation 32
9. Implications for designing a new regulatory regime for pensions 35
9.1 Conditional indexation-type pensions 35
9.2 Collective Defined Contribution plans 37
10. Conclusion 39
Appendix. Current regulation of pensions 42
Individual personal pensions 42
Group Personal Pensions 43
Occupational Defined Contribution pensions 43
Occupational Defined Benefit pension plans 44
Share option schemes 46
References 47