Class%20#4%20461%20NDFI%20PF%20Ins0

Class%20#4%20461%20NDFI%20PF%20Ins0 - Non Deposit Financial...

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Non Deposit Financial Intermediaries Pension Funds Insurance Companies
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2 Current Events Presentations TODAY: Jamie Jongebloed TUESDAY: Dooyoung Kim and Daniel Wang Assignment: Text, Chapters 4 and 5 Bank/BHC selection for bank project due by 2:00 Thursday, September 9 Office hours today 3:30 to 4:30 SEATING CHART ON TUESDAY
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3 Class Outline 1. Types of firms and characteristics 2. Pension funds DB and DC plans Estimating liabilities PBGC and recent ups and downs with DB pensions 3. Economics of insurance
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4 1. Types of firms and characteristics Characteristics of non deposit financial intermediaries ( NDFIs ): No deposit liabilities (some exceptions) No insured liabilities (some exceptions) Most assets are securities (not loans) Some are stock ; some are mutuals Some offer specialized services (insurance); some serve a market niche (finance companies); some are pure intermediaries (mutual funds)
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5 2. Pension funds In the US pensions are provided by employers to their employees . Social security is a separate government plan Employers are not required to offer pension plans, but if they do the plan must follow rules established by (tax) law. The number of employers offer pension plans to their employees has been declining recently.
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6 Pension fund setup A pension fund is set up by an employer on behalf of its employees . The company (and sometimes employee) contributes money to a pension fund Balances are invested in financial assets Earnings and liquidations are used to pay pension annuities to employees during their retirement—until death (life annuity) The plan (investments, payments) is run by the company ( trustee ) or an outside contractor (e.g. insurance company )
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7 Hired Investment Managers Invest funds Employer $ Pension Asset earnings and Annuities Fund $ Paid to $ Assets asset liquidations Retirees Employees Company Trustee Administers the Fund
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Class%20#4%20461%20NDFI%20PF%20Ins0 - Non Deposit Financial...

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