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Executive Summary
As Defined Contribution retirement plans become more widespread, multiple investment options for members appear as a standard. For example, life-style funds (offering different risk profiles) or target-date funds (with risk decreasing as a predefined maturity approaches) are becoming more and more popular. It is very difficult to strike the optimal trade-off between the need for exhaustive disclosure and that of simple and effective information. The authors analyze in detail the present offering of dc plans with multiple options in Italy . They also refer to the current debate in the UK, to the Swedish experience and to contributions from behavioral economics. “Ibbotson cones” or similar devices, if associated with investor-oriented “default-options” could represent a simple and effective way of conveying information at inception. Moreover this solution would have the advantage of conveying in a very direct way information on the risks and rewards of equity investment vs. guaranteed portfolios.
Original paper in Italian in the volume ”La previdenza complementare in Italia”
-Marcello Messori, Il Mulino 2006. Translation in English available on request.
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