Funded and private pensions

Private pensions in Latin America have emerged stronger after the financial and economic crisis


15/10/2009, Rio de Janeiro - The OECD and the International Organisation of Pension Supervisors (IOPS) at their annual conference web page have discussed the impact and policy responses to the financial and economic crisis on the pension industry. Particular focus was on the major policy developments in the Brazilian pension industry.


Participants highlighted the regulatory advances that Brazil has made in “putting in place a consolidated body of regulation” and “the high level of compliance with OECD recommendations on Core Principles of Occupational Pension Regulation”. In this context, efforts to create an independent regulatory agency (PREVIC) are an important step in the right direction. Participants also identified “introducing risk-based supervision as the main challenge for the future”.


The conference also discussed savings adequacy and coverage, and new approaches to life cycle investing. Measures to reduce volatility and the need for instruments to provide greater flexibility in the payout phase were seen as major challenges.


Participants also discussed the impact of the recent financial and economic crisis on pension systems in the Latin American region. Mr. Pablo Antolin, a senior economist from the OECD’s private pension unit commented that: “The pension systems in Latin American have had come out of the crisis strengthened. The ‘multi-fondos’ approach to investment adopted in many of these countries has offered some protection to vulnerable investors close to retirement. Governments and pension regulators have resisted pressures to nationalise their pension assets. Indeed, they have adopted quite the opposite approach - continuing to press ahead with reforms of their private pension systems. For example, important measures like introducing a safety net to strengthen minimum pensions have been introduced in Chile.” Solagne Berstein - Superintendent of Chile, and Lorena Masias - Deputy Superintendent of Peru, both highlighted the “importance of the long-term for saving for retirement” and “the large fluctuations in valuations that the crisis and the recent recovery of equity markets have shown”. 


On coverage, speaking at the Conference, Mr. Musa Ibrahim - Commissioner, National Pension Commission of Nigeria - added that “to arrive to a minimum level of coverage we need to put it in the context of the overall pension system replacement rates, and regulators and policy makers have to understand the needs of the people”.


Mr. Ross Jones, Deputy Chairman of the Australian Prudential Regulation Authority and President of IOPS, concluded that “the distinction between defined contribution or defined benefits arrangement is losing relevance as all pension systems face the same type of risks. New approaches to risk sharing are being developed to restore confidence in private pensions.”


For further information, journalists are invited to contact Fiona Stewart (Tel. + 33 1 45 24 14 52 or + 33 6 84 06 28 49) or Pablo Antolin (Tel. + 33 1 45 24 90 86), OECD Financial Affairs Division or visit the conference web page.



Related Documents