Pension scheme trustees as surrogate decision makers

Article

Weiss-Cohen, L., Ayton, P., Clacher, I. and Thoma, V. 2021. Pension scheme trustees as surrogate decision makers. Finance Research Letters. https://doi.org/10.1016/j.frl.2021.102043
AuthorsWeiss-Cohen, L., Ayton, P., Clacher, I. and Thoma, V.
Abstract

Pension trustees make surrogate decisions on behalf of scheme members. However, prior research has not explored how this might affect pension adequacy. Our results show that when setting targets for pension replacement income, trustees project their own preferences instead of reflecting member preferences. Furthermore, projection was more pronounced for trustees with lower financial literacy. Trustees choose significantly higher pension replacement rates for members than members choose for themselves. Trustees also choose replacement rates higher than current benchmarks. The economic consequences are potentially considerable, due to high levels of pension contributions and incompatible risk-taking. A better understanding of the dynamics of decisions made by trustees is needed to ensure better member outcomes.

JournalFinance Research Letters
ISSN1544-6123
Year2021
PublisherElsevier
Accepted author manuscript
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Anyone
Digital Object Identifier (DOI)https://doi.org/10.1016/j.frl.2021.102043
Publication dates
Online03 Apr 2021
Publication process dates
Accepted01 Apr 2021
Deposited06 Apr 2021
Copyright holder© 2021 Elsevier
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