臺大管理論叢 NTU Management Review VOL.29 NO.2

19 NTU Management Review Vol. 29 No. 2 Aug. 2019 A Study of Member-Choice Management Platform for Pension Funds 1. Introduction Pension reform has attracted much attention from households and academics and has become a major challenge for policy makers since most countries have serious problems of under-funding pensions. In Taiwan, New Labor Pension Fund (NLPF) is the largest pension plan with a fund size of 1,738.8 billion New Taiwan Dollar in May 2017 and is managed by the Bureau of Labor Funds (BLF), Ministry of Labor. Since the Taiwan government provides NLPF with a guarantee return of two-year deposit for the beneficiaries, the BLF tends to be conservative and risk averse in asset allocation. The 10-year annual return of funds managed by BLF is about 3%, which is slightly higher than the guaranteed return of two-year deposit, 1.5%. The NLPF investment return has caused participants with different risk preferences to debate whether the performance is satisfying since, in general, young workers who expect to work for a long time and old workers who will retire soon have different preferences for risk and return. Currently, Taiwan’s workers have no rights to make asset allocation for their own pension in NLPF and all workers take the same risk and return. It becomes crucial for policymakers to reform the pension management to strengthen the retirement safety of workers who have different preferences for risk and return. 2. Literature Review/Methodology This study employs the literature review methodology, compares the pension management platforms of the largest pensions in eight countries, and investigates the application of behavioral economics on retirement plans. Thaler and Sunstein employ the concept of nudge to encourage workers to participate in retirement savings plans and the implementation is very effective in raising participation rates and savings rates. Nudge helps people make better decisions, especially when people are involved in uncertain situations with asymmetric information. The behavioral concepts in designing retirement savings plans are discussed as follows: status quo bias, procrastination, self-control, loss Chan-Chuan Tung , Department of Finance, National Chung Hsing University Anchor Lin , Department of Finance, National Chung Hsing University Grace Lee , Pension Fund Association, R.O.C.