Private pension plans are different in several respects from the policy of optimal risk sharing plans. The economic environment is different with pension funds and are much riskier and having more dynamic nature than conventional pension funds investment. Therefore, the retirement contracts that work well in practice might be able to deviate from the optimal contracts in pension funds. (more…)

If you check your paycheck stub, you find an entry labeled FICA, which is an acronym for Federal Insurance Contributions Act. Your “contribution” is matched by your employer and is deposited in the Social Security Trust Fund. It shows you how much money was paid into the Trust Fund by employers, employees, and the self-employed in 1998 (the figures used are from the IRS). (more…)