Portfolio Limits : Pension Investment Restrictions Compromise Fund Performance
The value of funded pensions can depend
critically on the funds' investment performance. To try
and protect people's savings, governments often
regulate pension funds strictly, particularly when
contributions are mandatory. For example, the new funded
pension systems in Latin America and Eastern Europe are more
stringently regulated than private pensions in OECD
countries, which are mainly voluntary. While these pension
fund regulations take three different forms, this briefing
focuses on one of these: quantitative restrictions on
pension funds' portfolios. Quantitative restrictions on
the share of particular types of assets held by the fund
limit the dispersion of outcomes, particularly for defined
contribution schemes. In most mandatory schemes, this leads
to a 'single portfolio' environment where members
of the scheme are forced to hold basically the same
portfolio. Most common are limits on risky assets such as
shares and corporate bonds. Often, foreign investments are
curtailed. This review includes a look at the adverse
effects of portfolio limits, and argues for relaxing
investment rules so that pension funds can reap the benefits
from international diversification.
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Bibliographic Details
| Main Author: |
World Bank |
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| Format: | Brief
biblioteca
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| Language: | English |
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| Published: |
World Bank, Washington, DC
2000-01
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| Subjects: | ADVERSE EFFECTS,
ANNUAL RETURN,
ASSET PRICES,
ASSETS,
BENCHMARK,
BONDS,
CAPITAL FLIGHT,
COMPETITIVENESS,
CONSUMERS,
DEFICIT SPENDING,
DEVALUATION,
DOMESTIC CAPITAL,
DOMESTIC CAPITAL MARKETS,
EQUITY RETURNS,
FINANCIAL INSTITUTIONS,
FINANCIAL INSTRUMENTS,
FINANCIAL SERVICES,
FOREIGN INVESTMENT,
FUNDED PENSION SYSTEMS,
FUNDED PENSIONS,
GDP,
GOVERNMENT BONDS,
IMPLICIT GUARANTEES,
INSTITUTIONAL INVESTORS,
INVESTMENT FUND,
INVESTMENT PERFORMANCE,
INVESTMENT RESTRICTIONS,
INVESTMENT RETURNS,
LATIN AMERICAN,
LIQUIDITY,
MANDATORY SCHEMES,
MANDATORY SYSTEM,
MARKET DEVELOPMENT,
MORTGAGES,
MUTUAL FUND,
MUTUAL FUNDS,
PENSION FUND,
PENSION FUND INVESTMENT,
PENSION FUND MANAGEMENT,
PENSION FUND MANAGERS,
PENSION FUND MEMBERS,
PENSION FUND PORTFOLIOS,
PENSION FUNDS,
PENSION LIABILITIES,
PENSION REFORM,
PENSION REFORMS,
PENSION SYSTEM,
PENSIONERS,
PORTFOLIO,
PORTFOLIOS,
PRIVATE PENSION,
PRIVATE PENSION FUNDS,
PRIVATE PENSION SYSTEMS,
PRIVATE PENSIONS,
PUBLIC FINANCES,
PUBLIC GUARANTEES,
PUBLIC SECTOR,
RATE OF RETURN,
RETIREMENT,
RETIREMENT INCOME,
RETIREMENT INCOME SECURITY,
RETIREMENT SAVINGS,
RISKY INVESTMENTS,
SECURITIES,
SOCIAL PROTECTION,
STOCKS,
TAXATION,
TRANSPARENCY,
VENTURE CAPITAL, |
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| Online Access: | http://documents.worldbank.org/curated/en/2000/01/6326234/portfolio-limits-pension-investment-restrictions-compromise-fund-performance
http://hdl.handle.net/10986/11445
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