2020 Annual Uehiro Lectures in Practical Ethics (1/3): The case for a funded pension with a defined benefit (DB)
Lecture 1 Abstract: I begin by drawing attention to the efficiencies in the pooling of longevity and investment risk that collective funded pension schemes provide over individual defined contribution (IDC) pension pots in guarding against your risk of living too long. I then turn to an analysis of those collective schemes that promise the following defined benefit (DB): an inflation-proof income in retirement until death, specified as a fraction of your salary earned during your career. I consider the concepts and principles within and beyond financial economics that underlie the valuation and funding of such a pension promise. I assess the merits of the ‘actuarial approach’ to funding an open, ongoing, enduring DB scheme at a low rate of contributions invested in ‘return-seeking’ equities and property. I also consider the merits of the contrasting ‘financial economics approach’, which calls for a higher rate of contributions set as the cost of bonds that ‘match’ the liabilities. I draw on the real-world case of the UK’s multi-employer Universities Superannuation Scheme (USS) to adjudicate between these approaches. The objectives of the Pensions Regulator, the significance of the Pension Protection Fund, and the decision of Trinity College Cambridge to withdraw from USS to protect itself against being the ‘last man standing’, all figure in the discussion.
Date: 3 November 2020, 15:30 (Tuesday, 4th week, Michaelmas 2020)
Venue: Venue to be announced
Speaker: Professor Michael Otsuka (London School of Economics)
Organising department: Oxford Uehiro Centre for Practical Ethics
Organiser: Professor Julian Savulescu (Oxford Uehiro Centre for Practical Ethics)
Organiser contact email address: rachel.gaminiratne@philosophy.ox.ac.uk
Host: Professor Julian Savulescu (Oxford Uehiro Centre for Practical Ethics)
Part of: Annual Uehiro Lectures
Booking required?: Required
Booking url: https://us02web.zoom.us/webinar/register/WN_SwtlrCyPTkCpPPijHvAlmg
Cost: Free
Audience: Public
Editor: Rachel Gaminiratne