Related items
Showing items related by title, author, creator and subject.
-
General Trends in Competition Policy and Investment Regulation in Mandatory Defined Contribution Markets in Latin AmericaFollowing Chile's pension reform in
 1981, a wave of multi-pillar pension reforms took place in
 Latin America (LAC). Their implementation has revealed new
 policy challenges. To shed light on these issues, this paper
 reviews the structure and performance of mandatory DC
 pillars in LAC. The review highlights three important
 points. First, it suggests overall positive outcomes from
 reforms in the LAC countries that implemented multi-pillar
 pension systems. There is, however, scope for increasing
 efficiency. Second, management fees have declined but remain
 relatively high whereas decreases in operational costs have
 only been partially passed through to consumers reflecting
 inadequate competition. Limits on transfers and related
 measures have been ineffective in curtailing management fees
 but created new barriers to entry. In recent years, a few
 countries in LAC introduced or are in the process of
 introducing a combination of new measures that focus more
 directly on the two root causes of inadequate competition -
 the inelasticity of demand to fees and selective elimination
 of barriers to entry by facilitating unbundling of services.
 These new measures show some promise. Third, the
 paper's review indicates that a greater diversification
 of pension fund portfolios in LAC appears to be necessary.
 Portfolio concentration owes to the adoption of strict
 quantitative investment regulations, underdeveloped capital
 markets and volatile macroeconomic environments. A gradual
 relaxation of these restrictions is now in progress in
 several countries. Regulators have become more conscious of
 the costs imposed by such regulations and macroeconomic
 conditions have improved. Greater overseas diversification
 seems inevitable given the development stage of local
 capital markets.
-
Mexico : Capital Market DevelopmentSecurities markets in Mexico are orderly
 and relatively innovative; however, corporate markets lag
 behind those in comparator countries. The government bond
 market accounts for the bulk of the fixed-income segment,
 and is well developed and active. While financial savings
 rates have been growing, little has been transformed into
 long-term investments. Most of the savings remain in
 traditional savings accounts. Institutional investors still
 hold the bulk of their assets in government bonds. Mexico
 will need to find solutions to further develop its capital
 market to fund its development needs. In the infrastructure
 sector alone, the country needs approximately US$230 billion
 of new investments. In the corporate sector, provision of
 financing by banks fare well below peers, especially for
 small and medium enterprises. Meanwhile, the pension fund
 industry, growing at about US$20-US$30 billion annually,
 requires sound investment outlets. The large concentration
 in the control of financial intermediaries raises complex
 issues and may stunt market development. The investor base
 in the equity market lacks diversity, with limited
 development of the retail segment. Mutual funds could play a
 key role in mobilizing long-term finance. Most funds are
 used by banks as alternative ways of tapping clients'
 savings. Mutual funds (particularly open ones) are much more
 sensitive to liquidity risks than institutional investors
 with long-term horizon. The independent distribution vehicle
 created under the 2002 reform has not been very successful
 in fostering sustainable entry. Restrictions placed on
 institutional investors limiting investment to only publicly
 offered securities keep them away from more specialized investments.
-
Competition and Performance in the Polish Second PillarThis paper provides an assessment of the
 Polish funded pension system and the quality of the
 regulatory framework for the accumulation phase. There are
 two elements that distinguish the Polish pension fund
 portfolios from other reforming countries': the
 relatively high component of domestic equity, and the
 negligible component on international securities. Although
 this asset allocation has provided relatively high real
 rates of return in the past, it may not be the case in the
 future, as further portfolio diversification to other
 instruments will become necessary to ensure sustainable
 rates of return. The paper provides a number of
 recommendations to expand the opportunities of investments
 to pension funds. The paper finds that pension fund
 management companies have been able to exploit scale
 economies in certain areas of the business, such as
 collection of revenues, and proposes to study mechanisms to
 enhance them even more by centralizing also the account
 management system, which may also help to increase portfolio
 efficiency and competition. The paper suggests that, with
 the payout phase starting in 2009, broad definitions in
 areas such as the role of the public and private sector need
 to be established. The paper examines products and options
 that authorities may consider for the design of the payout phase.