Centro de Documentacion de Fundación MAPFRE - Is there an optimal pension fund size? A scale-economy analysis of administrative costs

MAP20170019596

Is there an optimal pension fund size? A scale-economy analysis of administrative costs / Jacob A. Bikker

Sumario: This article investigates scale economies and the optimal scale of pension funds, estimating different cost functions with varying assumptions about the shape of the underlying average cost function: U-shaped versus monotonically declining. Using unique data for Dutch pension funds over 1992-2009, we find that unused scale economies for both administrative activities are indeed large and concave, that is, huge for small pension funds and decreasing with pension fund size. We observe a clear optimal scale of around 40,000 participants during 1992-2000 (pointing to a U-shaped average cost function), which increases in subsequent years to size above the largest pension fund, pointing to monotonically decreasing average costs. These model-based outcomes are roughly in line with the results of a survivorship analysis

En: The Journal of risk and insurance. - Nueva York : The American Risk and Insurance Association, 1964- = ISSN 0022-4367. - 05/06/2017 Volumen 84 Número 2 - junio 2017 , p. 739-769

1. Economías de escala . 2. Fondos de pensiones . 3. Modelos actuariales . I. Título.