Pension Funds and Capital Markets : Investment Regulation, Financial Innovation, and Governance
This Note briefly examines the dynamic interaction that can develop between pension funds and capital markets. Pension funds are not only a source of long-term savings to support the development of bond and equity markets. They can also be a posi...
| Main Author: | |
|---|---|
| Format: | Viewpoint |
| Language: | English |
| Published: |
World Bank, Washington, DC
2012
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/1996/02/696756/pension-funds-capital-markets-investment-regulation-financial-innovation-governance http://hdl.handle.net/10986/11632 |
| Summary: | This Note briefly examines the dynamic
interaction that can develop between pension funds and
capital markets. Pension funds are not only a source of
long-term savings to support the development of bond and
equity markets. They can also be a positive force for
innovation, for corporate governance, and for privatization.
In turn, capital markets offer pension funds the opportunity
for better portfolio returns and risk management. This
interaction is a long, self-reinforcing process that builds
on sound macroeconomic policies, effective regulatory
reforms, as well as robust accounting, legal, and
information infrastructure. The key message for
policymakers is that pension reform should be part of a
broad reform program. It need not be delayed until capital
markets are well established. But, equally important, large
quantities of state assets should not be transferred to
newly formed private pension funds without first taking
steps to develop robust and well-regulated capital markets.
Chile's gradual approach to investment deregulation is
a good model for developing countries introducing mandatory
but decentralized pension systems. |
|---|