Political Embeddedness of Public Pension Governance: An Event History Analysis of Discount Rate Changes

Qiushi Wang, Jun Peng

Research output: Contribution to journalArticle

2 Citations (Scopus)

Abstract

State governments are frequently said to manipulate the discount rate assumption to make pension funding look better, reduce employers' and employees' pension contributions, or relieve fiscal stress. Building a model from the political embeddedness perspective and applying an event history analysis to the 81 largest state-administered pension plans in the United States, the authors found that more politically embedded pension boards were actually more likely to reduce their plan's discount rate. Public union coverage and government political ideology, however, had no significant impact on discount rate changes. These findings reveal the effect of political embeddedness on pension planning decisions and provide useful insights into the intricate process of setting pension discount rates in a new era of more muted investment return expectations. This article points to both political and financial pressures facing pension boards and state governments for many years to come.

Original languageEnglish (US)
JournalPublic Administration Review
DOIs
StateAccepted/In press - Jan 1 2018

Fingerprint

pension
governance
event
political ideology
Public pensions
Discount rate
Event history analysis
Governance
Embeddedness
Pensions
employer
coverage
funding
employee
planning
State government

ASJC Scopus subject areas

  • Sociology and Political Science
  • Public Administration
  • Marketing

Cite this

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