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In the present article we develop a discrete-time methodology to compare frontend load and balance fees in the accumulation phase of a defined-contribution pension fund under the system of individual accounts. Additionally, using various methods, we study the effect of considering risk and density of contributions in the performance and suitability of the aforementioned types of fees. Finally, we perform a practical application of the methodology to the Peruvian Private Pension System., En el presente artículo se desarrolla una metodología en tiempo discreto para comparar esquemas de cobro de comisiones por saldo y flujo (sueldo) en la fase de acumulación de un fondo de pensiones bajo capitalización individual. Asimismo, mediante distintos métodos se estudia el efecto de incluir el riesgo y la densidad de cotización en el desempeño e idoneidad de los tipos de comisión antes mencionados. Finalmente, se realiza una aplicación práctica de la metodología en el Sistema Privado de Pensiones del Perú.

In the present article we develop a discrete-time methodology to compare front-end load and balance fees in the accumulation phase of a defined-contribution pension fund under the system of individual accounts. Additionally, using various methods, we study the effect of considering risk and density of contributions in the performance and suitability of the aforementioned types of fees. Finally, we perform a practical application of the methodology to the Peruvian Private Pension System. En el presente art?culo se desarrolla una metodolog?a en tiempo discreto para comparar esquemas de cobro de comisiones por saldo y flujo (sueldo) en la fase de acumulaci?n de un fondo de pensiones bajo capitalizaci?n individual. Asimismo, mediante distintos m?todos se estudia el efecto de incluir el riesgo y la densidad de cotizaci?n en el desempe?o e idoneidad de los tipos de comisi?n antes mencionados. Finalmente, se realiza una aplicaci?n pr?ctica de la metodolog?a en el Sistema Privado de Pensiones del Per?.

In this article, we determine a charge on balance that is equivalent to a certain fixed charge on flow for a particular utility–maximizer affiliate participating in a defined-contribution pension fund under the system of individual accounts. We also prove, under market completeness, that the equivalent charge on balance depends only on the current level of the charge on flow, the length of the accumulation period and the risk free rate of return. En este artículo se determina una exacción en el balance, que es equivalente a cierta tasa fija en el flujo de una empresa asociada particular maximizadora, que participa en un fondo de pensiones de aportación definida en el sistema de cuentas individuales. También se prueba, en la integridad del mercado, que la exacción de tipo equivalente en el balance depende solo del nivel actual de la tasa en el flujo, la duración del período de acumulación y un tipo de rentabilidad sin riesgo. En este artículo se determina una exacción en el balance, que es equivalente a cierta tasa fija en el flujo de una empresa asociada particular maximizadora, que participa en un fondo de pensiones de aportación definida en el sistema de cuentas individuales. También se prueba, en la integridad del mercado, que la exacción de tipo equivalente en el balance depende solo del nivel actual de la tasa en el flujo, la duración del período de acumulación y un tipo de rentabilidad sin riesgo.

The existence of a sound financial consumer protection framework is fundamental to increasing access to and usage of financial services, and the quality of those financial services, along with supporting further financial sector deepening. Financial consumer protection is a necessary precursor to building trust in the formal financial sector and thus in encouraging financial inclusion. Further, consumer protection helps ensure that expanded access benefits consumers and the economy as a whole. While increased access can result in significant economic and societal benefits, it can be neutral or even harmful if consumers: (i) cannot exercise their rights as consumers, (ii) cannot select the financial products that suit them best; and (iii) are not protected from mis-selling, fraud, and other market abuses. The main objective of a CPFL Review is to assess the legal, regulatory, and institutional frameworks for financial consumer protection in a country, with reference to the good practices. The following areas are addressed: (i) institutional arrangements, (ii) the legal and regulatory framework, (iii) transparency and disclosure, (iv) business practices, (v) complaints handling and dispute resolution mechanisms and (vi) financial literacy/capability. All parts of a financial sector can be considered, including banking, non-bank credit institutions, insurance, securities, private pensions, and credit reporting.

This report provides an initial stocktaking of the characteristics, environment and performance of public and private pensions and elderly assistance programs in Sub-Saharan Africa. It identifies key challenges and suggests reform options for consideration. Considerations for future work and principles for pension policies are also suggested. Two major challenges noted in the report are the need to increase coverage of the labor force by pensions and social insurance schemes, and to increase the proportion of poor elderly covered by social assistance. The report suggests that improving coverage will require a number of parametric reforms to existing contributory schemes, strengthening institutions to serve informal sector workers, and piloting new design options. The report also proposes other parametric reforms, including the harmonization or merger of civil service and national pension schemes. Finally, the report recommends principles to consider for reform, including measures to improve coverage, protect the elderly poor, and better align pension design with needs and enabling conditions, including the needs of rural and informal sector workers.

This paper estimates the effects of peer benchmarking by institutional investors on asset prices. To identify trades purely due to peer benchmarking as separate from those based on fundamentals or private information, the paper exploits a natural experiment involving a change in a government imposed underperformance penalty applicable to Colombian pension funds. This change in regulation is orthogonal to stock fundamentals and only affects incentives to track peer portfolios allowing the authors to identify the component of demand due to peer benchmarking. The authors find that peer effects among pension fund managers generate excess in stock return volatility, with stocks exhibiting short-term abnormal returns followed by returns reversal in the subsequent quarter. Additionally, peer benchmarking produces an excess in comovement across stock returns beyond the correlation implied by fundamentals.

This study provides a framework for comparison and benchmarking of administrative expenditures of public and private social security programs. The paper presents the genesis of the inquiries into the subject, reviewing some of the most relevant literature on administrative expenditures and the costs of mandatory programs produced over the past two decades. The quantitative analysis builds on the extensive body of literature, but our framework evolved considerably from earlier studies. Our dataset includes over 100 observations and a broad set of explanatory variables. The authors developed and compared a number of standardized cost indices discussing their advantages and limitations. The author also discusses major cost components and their shares in total program costs. The analysis explains over 90 percent of variation in administrative expenditures. It confirms some of the hypotheses expressed in the earlier studies and presents new evidence of driving factors for costs. The author developed three different specifications for statistical analysis. The first set looks at the impact of design of a program on total costs. The second group of specifications assesses differences in costs of managing pension liabilities between the public and private mandatory pension schemes. Finally, on the basis of the third model the author generate benchmarks for staffing levels and for the total administrative expenditures. The author compares those to the actual indicators and develops standard performance ratios, providing insights into design variations and performance of the programs. The author concludes with a discussion of data limitations and implications of our findings.

This policy note examines Thailand's programs for preventing poverty among the elderly, and suggests options for improving the effectiveness of these programs. The number of elderly people in Thailand will increase dramatically over the next 30 years, and the elderly already have a higher poverty rate than the population as a whole. Although Thailand currently has a total of eight pension programs, the majority of the benefits go to those who are not poor. In addition, unlike most countries, Thailand lacks a pension and provident fund supervision agency or a consolidated financial institution regulator, and does not appear to have a well-articulated national pension policy. This has led to the development of two major sets of pension programs, with one group sponsored by the ministry of labor and the social security office, and the other by the ministry of finance and the securities commission. These are also supplemented by an assortment of social assistance and community programs sponsored by the ministry of social development and human security and the ministry of interior. This policy note will examine the above issues in more detail and recommend policy options to simplify and coordinate the various pension and social assistance programs aimed at preventing poverty among the elderly, target more spending at the elderly poor, and assure long-term fiscal sustainability.

Portability of social benefits across professions and countries is an increasing concern for individuals and policy makers. Lacking or incomplete transfers of acquired social rights are feared to negatively impact individual labor market decisions as well as capacity to address social risks with consequences for economic and social outcomes. The paper gives a fresh and provocative look on the international perspective of the topic that has so far been dominated by social policy lawyers working within the framework of bilateral agreements; the input by economists has been very limited. It offers an analytical framework for portability analysis that suggests separating the risk pooling, (implicit or actual) pre-funding and redistributive elements in the benefit design and explores the proposed alternative approach for pensions and health care benefits. This promising approach may serve both as a substitute and complement to bi- and multilateral agreements.

The investment of pension assets is one of the core functions performed by private pension arrangements. In order to promote both the performance and the financial security of pension plan benefits, it is critical that this function is implemented and managed responsibly. Policymakers have therefore a key role to ensure that regulations encourage prudent management of pension fund assets so as to meet the retirement income objectives of the pension plan. The investment function varies depending on the type of pension plan. In the case of defined benefit plans, the goal of the investment function is to generate the highest possible returns consistent with the liabilities and liquidity needs of the pension plan, and in light of the risk tolerances of affected parties. In a defined contribution plan, the main goal of the investment function is to generate gains that accrue to individual member account balances in light of her investment goals

At the end of 2005, the State Council of China passed ”The Decision on adjusting the Individual Account of Basic Pension System”, which adjusted the individual account in the 1997 basic pension system. In this essay, we will analyze the adjustment above, and use Life Annuity Actuarial Theory to establish the basic pension substitution rate model. Monte Carlo simulation is also used to prove the rationality of the model. Some suggestions are put forward associated with the substitution rate according to the current policy.

Cross country data on public and private pension schemes are presented and explained. Relevant World Bank demographic projections and other indicators previously reported in ‘averting the old age crisis is updated. Relationships between key indicators are highlighted. Many of the data are available as retrievable spreadsheets in the World Bank’s Social Protection Web-site at http://www.worldbank.org/pensions.