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2020 Annual Uehiro Lectures in Practical Ethics (2/3): The case for collective defined contribution (CDC)

Series
Uehiro Lectures: Practical solutions for ethical challenges
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Professor Michael Otsuka (London School of Economics) delivers the second of three public lectures in the series 'How to pool risks across generations: the case for collective pensions'
On any sensible approach to the valuation of a DB scheme, ineliminable risk will remain that returns on a portfolio weighted towards return-seeking equities and property will fall significantly short of fully funding the DB pension promise. On the actuarial approach, this risk is deemed sufficiently low that it is reasonable and prudent to take in the case of an open scheme that will be cashflow positive for many decades. But if they deem the risk so low, shouldn't scheme members who advocate such an approach be willing to put their money where their mouth is, by agreeing to bear at least some of this downside risk through a reduction in their pensions if returns are not good enough to achieve full funding? Some such conditionality would simply involve a return to the practices of DB pension schemes during their heyday three and more decades ago. The subsequent hardening of the pension promise has hastened the demise of DB. The target pensions of collective defined contribution (CDC) might provide a means of preserving the benefits of collective pensions, in a manner that is more cost effective for all than any form of defined benefit promise. In one form of CDC, the risks are collectively pooled across generations. In another form, they are collectively pooled only among the members of each age cohorts.

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Uehiro Lectures: Practical solutions for ethical challenges
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2020 Annual Uehiro Lectures in Practical Ethics (1/3): The case for a funded pension with a defined benefit (DB)

Professor Michael Otsuka (London School of Economics) delivers the first of three public lectures in the series 'How to pool risks across generations: the case for collective pensions'
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Uehiro Lectures: Practical solutions for ethical challenges
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2020 Annual Uehiro Lectures in Practical Ethics (3/3): The case for an unfunded pay as you go (PAYG) pension

Professor Michael Otsuka (London School of Economics) delivers the final of three public lectures in the series 'How to pool risks across generations: the case for collective pensions'
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Episode Information

Series
Uehiro Lectures: Practical solutions for ethical challenges
People
Michael Otsuka
Keywords
pensions
risks
economics
collective pension
retirement
Department: Uehiro Oxford Institute
Date Added: 17/11/2020
Duration: 00:49:14

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