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Pension Funds and Capital Market Development: How Much Bang for the Buck?

Autor: Raddatz, Claudio; Schmukler, Sergio L.
Año: 2008
Resumen: This paper studies the relation between institutional investors and capital market development by analyzing unique data on monthly asset-level portfolio allocations of Chilean pension funds between 1995 and 2005. The results depict pension funds as large and important institutional investors that tend to hold a large amount of bank deposits, government paper, and short-term assets; buy and hold assets in their portfolios without actively trading them; hold similar portfolios at the asset-class level; simultaneously buy and sell similar assets; and follow momentum strategies when trading. Although pension funds may have contributed to the development of certain primary markets, these patterns do not seem fully consistent with the initial expectations that pension funds would be a dynamic force driving the overall development of capital markets. The results do not appear to be explained by regulatory restrictions. Instead, asset illiquidity and manger incentives might be behind the patterns illustrated in this paper.

Fuente: Banco Mundial
Clasificación: Fondos de Inversión
Tipo de Publicación: Documentos de Trabajo
Idioma:

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A Theory of Contribution Density and Implications for Pension Design

Autor: Valdés-Prieto, Salvador.
Año: 2008
Resumen: The adequacy of contributory pensions for the middle classes depends on density of contribution. Density can be far below 100% because the State is unable or unwilling to impose the mandate to contribute on all jobs, especially on poor workers such as many in self-employment and small firms. The paper presents a model where individuals choose whether to bundle saving for old age in a covered job or to save independently while choosing an uncovered job. The determinants of the effective rate of return offered by the contributory pension plan include the earnings differential. This return is then compared with the returns offered by pure saving in the financial market, to determine the equilibrium density of contribution. The paper also applies the model to assess two standard designs for noncontributory subsidies for the old poor. It finds that these standard designs crowd out contributory pensions for the middle classes by reducing density. The paper also considers two second-generation designs for noncontributory subsidies and other approaches to raise density. This model also allows optimization of the combined multipillar structure, where participants get noncontributory pensions and also contributory pensions based on both mandates and fiscal incentives.

Fuente: Banco Mundial
Clasificación: Seguridad Social y Sistemas de Pensiones
Tipo de Publicación: Documentos de Trabajo
Idioma:

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Efficiency and Performance of Bulgarian Private Pensions

Autor: Impavido, Gregorio
Año: 2008
Resumen: This paper analyzes the performance of the Bulgarian private defined contribution pensions in the second and third pillars of the pension system.

Fuente: Fondo Monetario Internacional (FMI)
Clasificación: Seguridad Social y Sistemas de Pensiones
Tipo de Publicación: Documentos de Trabajo
Idioma:

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What Can Countries in Other Regions Learn from Social Security Reform in Latin America?

Autor: Gill, Indermit S.; Tatucu, Radu
Año: 2008
Resumen: About a dozen countries in Latin America have enacted reforms that include elements being contemplated elsewhere, including the partial privatization of social security. It is not easy to draw universal lessons for social security reform from the experience of countries such as Argentina, Chile, and Mexico, however, where sizeable public pension systems went bankrupt before the populations aged, mainly because of mismanagement. Most developing economies have much smaller social security systems. Relatively well-managed systems in industrial countries face problems that are long term in nature and have been brought about by an aging population. The experiences of Latin America nevertheless offer some general lessons for countries in other parts of the world. These lessons relate to changes in labor market incentives accompanying reforms and how workers react to them, government actions that have met with success in managing the transition to funded pensions, and the expectations of individuals from social security systems. Latin America's reforms suggest that the most effective approach is to keep payroll taxes low, governments solvent, and social security systems focused on providing reasonable insurance against poverty in old age.

Fuente: Banco Mundial
Clasificación: Seguridad Social y Sistemas de Pensiones
Tipo de Publicación: Documentos de Trabajo
Idioma:

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An Ex-Ante Evaluation of the Impact of Social Insurance Policies on Labor Supply in Brazil: The Case for Explicit Over Implicit Redistribution

Autor: Zylberstajn, Eduardo; Robalino, David A.; Zylberstajn, Helio; Afonso, Luis Eduardo
Año: 2008
Resumen: This paper solves and estimates a stochastic model of optimal inter-temporal behavior to assess how changes in the design of the income protection and pension systems in Brazil could affect savings rates, the share of time that individuals spend outside of the formal sector, and retirement decisions. Dynamics depend on five main parameters: preferences regarding consumption and leisure, preferences regarding formal Vs. informal work, attitudes towards risks, the rate of time preference, and the distributions of two exogenous shocks that affect movements in and out of the social security system (independently of individual decisions). The yearly household survey is used to create a pseudo panel by age-cohorts and estimate the joint distribution of model parameters based on a generalized version of the Gibbs sampler. The model does a good job in replicating the distribution of the members of the cohort across states (in or out of them social security / active or retired). Because the parameters are related to individual preferences or exogenous shocks, the joint distribution is unlikely to change when the social insurance system changes. Thus, the model is used to explore how alternative policy interventions could affect behaviors and through this channel benefit levels and fiscal costs. The results from various simulations provide three main insights: (i) the Brazilian SI system today might generate unnecessary distortions (lower savings rates, less formal employment, and more early retirement) that increase the costs of the system and might generate regressive redistribution; (ii) there are important interactions between the income protection and pension systems, which calls for joint policy analysis when considering reforms; and (iii) current distortions could be reduced by creating an actuarial link between contributions and benefits and then giving matching contributions or matching capital to individuals with limited savings capacity, which requires having individual savings accounts that can be funded or notional.

Fuente: Banco Mundial
Clasificación: Mercado Laboral
Tipo de Publicación: Documentos de Trabajo
Idioma:

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