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Participant-Mix and Management of Qualified Pension Plans

This paper examines if the management of qualified pension plans is affected by the mix of plan participants. Evidence is presented that defined-benefit pension plans that are dominated by highly compensated employees tend to contribute beyond the minimum amount required under the Internal Revenue C...

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Published in:	Accounting and the Public Interest 2009-01, Vol.9 (1), p.100-128
Main Author:	Asthana, Sharad C.
Format:	Article
Language:	English
Subjects:	Accounting Baby boomers Beneficiaries Compensation Defense contracts Defined benefit plans Dilution Earnings per share Employees Funding Hypotheses Impact analysis Investments Labor unions Profitability Profits Public interest Qualified pension plans Retirement income Social security Stockholders Studies Tax rates Wages & salaries
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container_title	Accounting and the Public Interest
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creator	Asthana, Sharad C.
description	This paper examines if the management of qualified pension plans is affected by the mix of plan participants. Evidence is presented that defined-benefit pension plans that are dominated by highly compensated employees tend to contribute beyond the minimum amount required under the Internal Revenue Code (flow effect), resulting in overfunded plans (stock effect), and then use of aggressive actuarial assumptions to disguise the overfunding to avoid visibility costs (reporting effect). These effects are less likely when the sponsoring firm has an active labor union (monitoring effect). These findings will be of interest to the federal government, Pension Benefit Guaranty Corporation, employees, and labor unions.
doi_str_mv	10.2308/api.2009.9.1.100
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subjects	Accounting Baby boomers Beneficiaries Compensation Defense contracts Defined benefit plans Dilution Earnings per share Employees Funding Hypotheses Impact analysis Investments Labor unions Profitability Profits Public interest Qualified pension plans Retirement income Social security Stockholders Studies Tax rates Wages & salaries
title	Participant-Mix and Management of Qualified Pension Plans
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