The Impact of Plan and Sponsor Characteristics on Pension Funds’ Asset Allocation and Currency Diversification

This paper presents new empirical evidence on the role of plan and sponsor characteristics in pension funds' investment decisions. In this research, we analyzed the portfolio allocation of 182 Belgian pension funds over the period 2001-2015. The results indicate that larger pension funds and pension funds with more active participants have better diversified equity portfolios. Furthermore, we show that pension funds in which employers pay higher contributions take more aggressive investment decisions; however, pension funds in which employees pay higher premiums take more conservative investment decisions. Finally, our findings suggest that corporate culture and performance parameters affect the investment behavior of pension funds.