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Upgrading the Investment Policy Framework of Public Pension Funds

Autor: ittas, Dimitri; Impavido, Gregorio; O'Connor, Ronan
Año: 2008
Resumen: Public pension funds have the potential to benefit from low operating costs because they enjoy economies of scale and avoid large marketing costs. But this important advantage has in most countries been dissipated by poor investment performance. The latter has been attributed to a weak governance structure, lack of independence from government interference, and a low level of transparency and public accountability. Recent years have witnessed the creation of new public pension funds in several countries, and the modernization of existing ones in others, with special emphasis placed on upgrading their investment policy framework and strengthening their governance structure. This paper focuses on the experience of four new public pension funds that have been created in Norway, Canada, Ireland and New Zealand. The paper discusses the safeguards that have been introduced to ensure their independence and their insulation from political pressures. It also reviews their performance and their evolving investment strategies. All four funds started with the romantic idea of operating as 'managers of managers' and focusing on external passive management but their strategies have progressively evolved to embrace internal active management and significant investments in alternative asset classes. The paper draws lessons for other countries that wish to modernize their public pension funds.

Fuente: Banco Mundial
Clasificación: Seguridad Social y Sistemas de Pensiones
Tipo de Publicación: Documentos de Trabajo
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Risk-based Supervision of Pension Funds: Emerging Practices and Challenges

Autor: Brunner, Greg; Hinz, Richard; Rocha, Roberto
Año: 2008
Resumen: Risk-based supervision of pension funds grew out of a project that was jointly conducted by the World Bank and the International Organization of Pension Supervisors (IOPS). The project was initiated in response to the increasing interest in the development of innovative approaches to pension supervision from the member countries of both institutions. The volume provides an initial assessment of the development of risk-based supervision of pension funds in four countries that have been pioneering the development of risk-based supervision methods in various forms. The volume is comprised of a summary chapter and in-depth studies of the experience in four individual countries-Australia, Denmark, Mexico, and Netherlands. These four country studies were prepared by experts familiar with the systems in each of the countries. The studies have been edited by World Bank staff to ensure a consistent approach to the analysis of the various countries' systems. Models of risk-based supervision demonstrate the benefits of moving away from an approach based on strict compliance, specific rules, and quantitative controls toward an approach that puts more emphasis on the identification and management of relevant risks. A risk-based approach encourages supervised entities to place a greater focus on risk management in their daily operations, which promotes a stronger pension system and more effective outcomes for the members of the system. It is also expected that moving to a risk-based approach to supervision will enhance the ability of supervisors to focus resources on areas of highest risk, which will, over time, result in a more efficient use of supervisory resources.

Fuente: Banco Mundial
Clasificación: Regulación y Supervisión
Tipo de Publicación: Libros
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Risk-Based Supervision of Pension Funds in Australia

Autor: Thompson, Graeme
Año: 2008
Resumen: This paper examines the development of risk-based supervision of pension funds in Australia. The large number of pension funds has meant that since the inception of pension fund supervision in the early 1990's the regulator has sought to identify high risk funds and focus its attention on these funds. However, the regulator developed a more sophisticated risk-rating model, known as PAIRS/SOARS, in 1992 in order to apply a more disciplined and consistent ratings methodology. Four reasons are given for the move towards more sophisticated risk-based supervision: 1) creation of an integrated supervisor which allowed the use of techniques used in banking and insurance to be adopted for pension fund; 2) the need to better use available supervisory resources; 3) several pension fund failures; and 4) concerns about industry weaknesses. Supervisory techniques used particularly in the banking industry, such as universal licensing, 'fit and proper' assessment, and risk management requirements were adopted for the pension sector between 2004 and 2006. The paper provides an outline of the PAIRS/SOARS risk-rating model which was also adopted. It observes that the approach provides an analytical discipline to risk assessment, strengthens the link between risk assessment and supervisory response, and allows better targeting of supervisory resources.

Fuente: Banco Mundial
Clasificación: Regulación y Supervisión
Tipo de Publicación: Documentos de Trabajo
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Risk-Based Supervision of Pension Institutions in Denmark

Autor: van Dam, Rein; Andersen, Erik Brink
Año: 2008
Resumen: This paper examines the move towards risk-based supervision of pension institutions in Denmark. Although Denmark has not adopted a comprehensive model to assess risk it has developed a number of building blocks which it uses for risk-based assessment. The motivations for improving risk assessment include a desire to identify emerging problems, and concerns about the solvency of pension institutions. In Denmark there is extensive use of guaranteed minimum returns in both the accumulation and payout phases which create substantial obligations on pension institutions, and focus attention on the integrity and solvency of the institutions which provide them. In conjunction with freeing up investment restrictions and moving towards market valuation of assets, the supervisor has introduced a 'traffic light' stress test model which calculates the effect of several market scenarios - the red test which is the more plausible and the yellow test which is possible but less likely. In addition to the use of the traffic light system, there has been a growing emphasis on the adequacy of internal risk control systems and greater reliance on market discipline. Pension institutions have sought to reduce their exposure to market volatility by better matching of assets and liabilities. There is a much better understanding of the risks inherent in the pension institutions' portfolios, and there has been a substantial increase in the use of hedging instruments.

Fuente: Banco Mundial
Clasificación: Regulación y Supervisión
Tipo de Publicación: Documentos de Trabajo
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The World Bank Pension Conceptual Framework

Autor: Banco Mundial
Año: 2008
Resumen: Since the mid 1980's, the World Bank has responded to the need to strengthen social insurance and contractual savings systems providing old age income support in developing countries. Such support has also been driven by pressures of global population aging, the erosion of informal and traditional family support systems, and weaknesses in the governance and administration of existing pension systems. The importance of effective formal sources of retirement income is accentuated by changes in work and family patterns including the increasing participation of women in formal employment, rising divorce rates, diminishing job stability and increases in local and international labor migration. The Bank's conceptual framework has emerged from its experience in Bank-supported reforms and the changing conditions and needs in client countries. Following the important work of the mid-1990's, averting the old age crisis that established key principles and concepts, the Bank's attention has increasingly focused on refining system designs to adapt these principles to widely varying conditions and better address the needs of diverse populations to manage the risks in old age.

Fuente: Banco Mundial
Clasificación: Seguridad Social y Sistemas de Pensiones
Tipo de Publicación: Artículo Académico
Idioma:

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