Solvency and performance persistence of defined benefit private and public pension plans

Abstract

Purpose

This study aims to examine the solvency and performance persistence of defined benefit private and public pension plans (DBPPs) in the Republic of Congo.

Design/methodology/approach

The authors use the 2 × 2 contingency table approach and the time product ratio (TPR)-based cross-product ratio (CPR) on data covering ten years from 2011 to 2020, with variable funded ratios and excess returns, to determine the solvency and performance persistence of defined benefit pension plans.

Findings

The authors document a lack of solvency and performance persistence in DBPP funds. They conclude that the solvency and performance of DBPP funds are not repetitive. The previous year's private and public defined benefit pension funds’ results do not repeat in the current year. Hence, the current solvency and performance of defined benefit pension funds are not good predictors of future funds' solvency and performance.

Originality/value

To the best of the authors’ knowledge, this study is the first to combine solvency and performance to examine the persistence of defined benefit pension plans in sub-Saharan Africa.

Citation

Mazonga Mfoutou, B.O. and Xie, Y.T. (2023), "Solvency and performance persistence of defined benefit private and public pension plans", African Journal of Economic and Management Studies, Vol. 14 No. 4, pp. 557-568. https://doi.org/10.1108/AJEMS-02-2022-0062