Chapter | Innovations in Investment Management | 2008

A New Generation of Pension Fund Management

by Robert C. Merton

Abstract

In talking about pension plans at this point in American economic and corporate history, we need to discuss three linked issues: the defined-benefit (DB) corporate plans that worked for our parents; the defined-contribution (DC) plans we're getting today because corporations no longer want to bear the expense and risk of the DB plan; and how we can reshape the DC plan into something that feels more like a DB plan in the near future. Although this chapter focuses on a U.S. context and corporate pension plans, retirement and asset-management issues are a global challenge, and indeed, while the details vary across geopolitical borders, the fundamentals are shared by employers and employees across the globe. What's happening with the DB plan, why is it happening, and what are the implications for asset markets and asset management?

Keywords: Asset Management; Investment Funds; Compensation and Benefits; Risk Management; Retirement; United States;

Citation:

Merton, Robert C. "A New Generation of Pension Fund Management." Chap. 1 in Innovations in Investment Management, edited by H. Gifford Fong, 1–17. JOIM Conference Series. New York: Bloomberg Press, 2008.