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Demography and investment behavior of pension funds: evidence for Switzerland

Published online by Cambridge University Press:  29 October 2007

DAVID S. GERBER  and
RENÉ WEBER
DAVID S. GERBER
Affiliation:
Head of Section for Financial Markets and Financial Services at theSwiss Federal Finance Administration (e-mail: [email protected])
RENÉ WEBER
Affiliation:
Senior Advisor to Executive Director at theInternational Monetary Fund (IMF) (e-mail: [email protected])
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Abstract

This paper focuses on the nexus between pension funds' balance sheet liabilities, reflecting their age profile and payments obligations, and the investment behavior and costs of these funds. The context of the analysis is the stringent regulatory framework and the highly fragmented and heterogeneous pension fund landscape in Switzerland. Detailed data from the Swiss Pension Statistic are analyzed using multivariate OLS-regressions. The evidence shows that a younger age structure and lower short-term benefits payouts are related to a higher share of equities and lower real estate holdings. Legal form, pension plan type, and size are important for administrative costs. The findings support the view that aging may lead to increased risk aversion and thus to a lower engagement of institutional investors in equities.

Type
Research Article
Information
Journal of Pension Economics & Finance , Volume 6 , Issue 3 , November 2007 , pp. 313 - 337
Copyright
Copyright © Cambridge University Press 2007

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