Company Stock and Pension Plan Diversification

Olivia S. Mitchell and Kent Smetters

in The Pension Challenge

Published in print November 2003 | ISBN: 9780199266913
Published online August 2004 | e-ISBN: 9780191601323 | DOI:
 Company Stock and Pension Plan Diversification

Show Summary Details


This chapter proposes a measure of the diversification level in defined contribution (DC) plans, and explains how plan participants can insure themselves against a decline in wealth due to an undiversified position with the DC plan. The measure shows the investor how efficiently his 401(k) portfolio is chosen. The insurance takes the form of an option contract that gives the recipient the higher of the return to company stock or diversified portfolio over a given future term.

Keywords: defined contribution plan; retirement plan; pension plan; retirement income; portfolio diversification; investment efficiency; insurance

Chapter.  8083 words.  Illustrated.

Subjects: Financial Markets

Full text: subscription required

How to subscribe Recommend to my Librarian

Buy this work at Oxford University Press »

Users without a subscription are not able to see the full content. Please, subscribe or login to access all content.