Proving Incentives for Long-Term Investment by Pension Funds : The Use of Outcome-based Benchmarks

A fundamental goal of any pension system is to ensure that members receive an adequate income when they retire. Although traditional defined benefit pension plans set out how pension income will be determined in advance and then strive to deliver t...

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Bibliographic Details
Main Author: Stewart, Fiona
Format: Policy Research Working Paper
Language:English
en_US
Published: World Bank, Washington, DC 2014
Subjects:
TAX
Online Access:http://documents.worldbank.org/curated/en/2014/05/19548017/proving-incentives-long-term-investment-pension-funds-use-outcome-based-benchmarks-proving-incentives-long-term-investment-pension-funds-use-outcome-based-benchmarks
http://hdl.handle.net/10986/18800
id okr-10986-18800
recordtype oai_dc
repository_type Digital Repository
institution_category Foreign Institution
institution Digital Repositories
building World Bank Open Knowledge Repository
collection World Bank
language English
en_US
topic ACCOUNTING
AMOUNT OF RISK
ANNUITY
ARBITRAGE
ASSET CLASS
ASSET CLASSES
ASSET MANAGEMENT
ASSET MANAGERS
ASSET VALUE
BALANCE OF PAYMENT
BANK POLICY
CAPITAL MARKET
CAPITAL MARKET DEVELOPMENT
CONFLICT OF INTEREST
CONTRACTUAL SAVINGS
CONTRIBUTION RATE
CORPORATE BONDS
CREDIBILITY
DEBT
DEBT FINANCING
DEFERRED ANNUITY
DEFINED BENEFIT
DEFINED BENEFIT PENSION PLANS
DEFINED CONTRIBUTION PENSIONS
DEFINED CONTRIBUTION PLANS
DEMOGRAPHIC
DEPENDENCY RATIO
DEPENDENCY RATIOS
DEVELOPING ECONOMIES
DIVERSIFIED PORTFOLIOS
DOMESTIC GOVERNMENT BONDS
DOMESTIC MARKETS
ECONOMIC CRISIS
EQUITIES
EQUITY FUND
EQUITY INVESTMENTS
EQUITY RETURNS
ETHICAL FUND
EXPOSURE
EXPOSURES
EXTERNAL ASSET
FINANCIAL CRISIS
FINANCIAL INSTITUTIONS
FINANCIAL INSTRUMENT
FINANCIAL INSTRUMENTS
FINANCIAL MARKETS
FINANCIAL PERFORMANCE
FINANCIAL SECTOR
FINANCIAL SYSTEM
FISCAL DEFICITS
FIXED ANNUITIES
FIXED INCOME
FOREIGN EXCHANGE
FOREIGN EXCHANGE RISK
FUND MANAGEMENT
FUND MANAGERS
FUND PERFORMANCE
FUNDED PENSION
FUNDED PENSION SYSTEMS
FUNDED SYSTEMS
FUTURE PENSION
FUTURE PENSIONS
GLOBAL CAPITAL
GLOBAL CAPITAL MARKETS
GLOBAL EQUITIES
GLOBAL EQUITY
GOVERNMENT POLICY
INCOMES
INDEXED BONDS
INDIVIDUAL ACCOUNT
INDIVIDUAL ACCOUNTS
INFLATION
INSTITUTIONAL INVESTORS
INSURANCE
INTERNATIONAL BANK
INTERNATIONAL DIVERSIFICATION
INTERNATIONAL FINANCIAL MARKETS
INVESTING
INVESTMENT APPROACH
INVESTMENT APPROACHES
INVESTMENT CHOICES
INVESTMENT DECISIONS
INVESTMENT GUIDELINES
INVESTMENT HORIZON
INVESTMENT OPPORTUNITIES
INVESTMENT PERFORMANCE
INVESTMENT REGULATION
INVESTMENT REGULATIONS
INVESTMENT RESTRICTIONS
INVESTMENT RETURN
INVESTMENT RETURNS
INVESTMENT RISK
INVESTMENT STRATEGIES
INVESTMENT STRATEGY
INVESTOR PROTECTION
JURISDICTION
JURISDICTIONS
LABOR MARKET
LABOUR INCOME
LEGAL FRAMEWORK
LIABILITY
LIQUID ASSETS
LIQUIDITY
LOCAL CAPITAL MARKETS
LOCAL MARKET
LONG-TERM INVESTMENT
LONG-TERM INVESTORS
MANDATORY SYSTEMS
MARKET INDEXES
MORTALITY
NATIONAL PENSION
NATIONAL PENSIONS
NATIONAL SAVINGS
NET RETURNS
OPTIMAL INVESTMENT
OPTIMAL PORTFOLIO
OPTIMAL PORTFOLIOS
OUTPUT
PENSION
PENSION ASSETS
PENSION AT RETIREMENT
PENSION AWARENESS
PENSION BENEFITS
PENSION FUND
PENSION FUND ASSET
PENSION FUND ASSETS
PENSION FUND MANAGEMENT
PENSION FUND MANAGERS
PENSION FUND MEMBERS
PENSION FUNDS
PENSION INCOME
PENSION INCOMES
PENSION INVESTMENT
PENSION LIABILITIES
PENSION PAYMENTS
PENSION PLAN
PENSION PROVIDERS
PENSION REFORM
PENSION REFORMS
PENSION REGULATION
PENSION REGULATORS
PENSION RESERVES
PENSION SAVINGS
PENSION SCHEME
PENSION STATEMENTS
PENSION SYSTEM
PENSION SYSTEMS
PENSIONERS
PENSIONS
PILLAR SYSTEMS
PORTFOLIO
PORTFOLIOS
PRIVATE PENSION
PRIVATE PENSION FUNDS
PRIVATE PENSIONS
PRIVATE PILLARS
PRIVATE SECTOR DEVELOPMENT
PUBLIC PENSION
PUBLIC PENSIONS
PUBLIC SYSTEM
RATE OF RETURN
RATES OF RETURN
REGULATOR
REGULATORS
REGULATORY AUTHORITY
REGULATORY BODY
REGULATORY FRAMEWORK
REGULATORY FRAMEWORKS
REPLACEMENT RATE
REPLACEMENT RATE TARGET
REPLACEMENT RATES
RESERVE
RESERVE FUNDS
RESERVE REQUIREMENT
RESERVES
RETIREMENT
RETIREMENT AGE
RETIREMENT DATE
RETIREMENT FUND
RETIREMENT INCOME
RETIREMENT INCOME SYSTEM
RETIREMENT POLICIES
RETIREMENT SAVINGS
RETURN
RETURN ON ASSETS
RETURNS
RISK AVERSION
RISK CONTROLS
RISK MANAGEMENT
RISK MANAGEMENT SYSTEM
RISK PROFILE
RISK PROFILES
RISK-FREE RATE
RISKY ASSETS
SECURITIES
SHORT-TERM VOLATILITY
SOCIAL INSURANCE
SOCIAL INSURANCE PROGRAM
SOLVENCY
SOVEREIGN BONDS
STOCKS
SUPERVISORY AGENCY
SUPERVISORY AUTHORITIES
SUPERVISORY AUTHORITY
SYSTEMIC RISKS
TAX
TRANSACTION
TRANSITION COUNTRIES
TREASURY
TREASURY BILLS
TRUSTEE
TRUSTEES
UNDERDEVELOPED CAPITAL MARKETS
VARIABLE ANNUITIES
WITHDRAWAL
spellingShingle ACCOUNTING
AMOUNT OF RISK
ANNUITY
ARBITRAGE
ASSET CLASS
ASSET CLASSES
ASSET MANAGEMENT
ASSET MANAGERS
ASSET VALUE
BALANCE OF PAYMENT
BANK POLICY
CAPITAL MARKET
CAPITAL MARKET DEVELOPMENT
CONFLICT OF INTEREST
CONTRACTUAL SAVINGS
CONTRIBUTION RATE
CORPORATE BONDS
CREDIBILITY
DEBT
DEBT FINANCING
DEFERRED ANNUITY
DEFINED BENEFIT
DEFINED BENEFIT PENSION PLANS
DEFINED CONTRIBUTION PENSIONS
DEFINED CONTRIBUTION PLANS
DEMOGRAPHIC
DEPENDENCY RATIO
DEPENDENCY RATIOS
DEVELOPING ECONOMIES
DIVERSIFIED PORTFOLIOS
DOMESTIC GOVERNMENT BONDS
DOMESTIC MARKETS
ECONOMIC CRISIS
EQUITIES
EQUITY FUND
EQUITY INVESTMENTS
EQUITY RETURNS
ETHICAL FUND
EXPOSURE
EXPOSURES
EXTERNAL ASSET
FINANCIAL CRISIS
FINANCIAL INSTITUTIONS
FINANCIAL INSTRUMENT
FINANCIAL INSTRUMENTS
FINANCIAL MARKETS
FINANCIAL PERFORMANCE
FINANCIAL SECTOR
FINANCIAL SYSTEM
FISCAL DEFICITS
FIXED ANNUITIES
FIXED INCOME
FOREIGN EXCHANGE
FOREIGN EXCHANGE RISK
FUND MANAGEMENT
FUND MANAGERS
FUND PERFORMANCE
FUNDED PENSION
FUNDED PENSION SYSTEMS
FUNDED SYSTEMS
FUTURE PENSION
FUTURE PENSIONS
GLOBAL CAPITAL
GLOBAL CAPITAL MARKETS
GLOBAL EQUITIES
GLOBAL EQUITY
GOVERNMENT POLICY
INCOMES
INDEXED BONDS
INDIVIDUAL ACCOUNT
INDIVIDUAL ACCOUNTS
INFLATION
INSTITUTIONAL INVESTORS
INSURANCE
INTERNATIONAL BANK
INTERNATIONAL DIVERSIFICATION
INTERNATIONAL FINANCIAL MARKETS
INVESTING
INVESTMENT APPROACH
INVESTMENT APPROACHES
INVESTMENT CHOICES
INVESTMENT DECISIONS
INVESTMENT GUIDELINES
INVESTMENT HORIZON
INVESTMENT OPPORTUNITIES
INVESTMENT PERFORMANCE
INVESTMENT REGULATION
INVESTMENT REGULATIONS
INVESTMENT RESTRICTIONS
INVESTMENT RETURN
INVESTMENT RETURNS
INVESTMENT RISK
INVESTMENT STRATEGIES
INVESTMENT STRATEGY
INVESTOR PROTECTION
JURISDICTION
JURISDICTIONS
LABOR MARKET
LABOUR INCOME
LEGAL FRAMEWORK
LIABILITY
LIQUID ASSETS
LIQUIDITY
LOCAL CAPITAL MARKETS
LOCAL MARKET
LONG-TERM INVESTMENT
LONG-TERM INVESTORS
MANDATORY SYSTEMS
MARKET INDEXES
MORTALITY
NATIONAL PENSION
NATIONAL PENSIONS
NATIONAL SAVINGS
NET RETURNS
OPTIMAL INVESTMENT
OPTIMAL PORTFOLIO
OPTIMAL PORTFOLIOS
OUTPUT
PENSION
PENSION ASSETS
PENSION AT RETIREMENT
PENSION AWARENESS
PENSION BENEFITS
PENSION FUND
PENSION FUND ASSET
PENSION FUND ASSETS
PENSION FUND MANAGEMENT
PENSION FUND MANAGERS
PENSION FUND MEMBERS
PENSION FUNDS
PENSION INCOME
PENSION INCOMES
PENSION INVESTMENT
PENSION LIABILITIES
PENSION PAYMENTS
PENSION PLAN
PENSION PROVIDERS
PENSION REFORM
PENSION REFORMS
PENSION REGULATION
PENSION REGULATORS
PENSION RESERVES
PENSION SAVINGS
PENSION SCHEME
PENSION STATEMENTS
PENSION SYSTEM
PENSION SYSTEMS
PENSIONERS
PENSIONS
PILLAR SYSTEMS
PORTFOLIO
PORTFOLIOS
PRIVATE PENSION
PRIVATE PENSION FUNDS
PRIVATE PENSIONS
PRIVATE PILLARS
PRIVATE SECTOR DEVELOPMENT
PUBLIC PENSION
PUBLIC PENSIONS
PUBLIC SYSTEM
RATE OF RETURN
RATES OF RETURN
REGULATOR
REGULATORS
REGULATORY AUTHORITY
REGULATORY BODY
REGULATORY FRAMEWORK
REGULATORY FRAMEWORKS
REPLACEMENT RATE
REPLACEMENT RATE TARGET
REPLACEMENT RATES
RESERVE
RESERVE FUNDS
RESERVE REQUIREMENT
RESERVES
RETIREMENT
RETIREMENT AGE
RETIREMENT DATE
RETIREMENT FUND
RETIREMENT INCOME
RETIREMENT INCOME SYSTEM
RETIREMENT POLICIES
RETIREMENT SAVINGS
RETURN
RETURN ON ASSETS
RETURNS
RISK AVERSION
RISK CONTROLS
RISK MANAGEMENT
RISK MANAGEMENT SYSTEM
RISK PROFILE
RISK PROFILES
RISK-FREE RATE
RISKY ASSETS
SECURITIES
SHORT-TERM VOLATILITY
SOCIAL INSURANCE
SOCIAL INSURANCE PROGRAM
SOLVENCY
SOVEREIGN BONDS
STOCKS
SUPERVISORY AGENCY
SUPERVISORY AUTHORITIES
SUPERVISORY AUTHORITY
SYSTEMIC RISKS
TAX
TRANSACTION
TRANSITION COUNTRIES
TREASURY
TREASURY BILLS
TRUSTEE
TRUSTEES
UNDERDEVELOPED CAPITAL MARKETS
VARIABLE ANNUITIES
WITHDRAWAL
Stewart, Fiona
Proving Incentives for Long-Term Investment by Pension Funds : The Use of Outcome-based Benchmarks
relation Policy Research Working Paper;No. 6885
description A fundamental goal of any pension system is to ensure that members receive an adequate income when they retire. Although traditional defined benefit pension plans set out how pension income will be determined in advance and then strive to deliver this, the growing number of defined contribution plans accumulate a sum of assets which can then be turned into a pension income on retirement. However, the amount of this retirement income is not predefined This frequently leads to a focus by not only most pension providers, but also regulators and pension plan members themselves on the short-term accumulation of pension assets rather than the longer-term goal of securing an adequate retirement income. This paper discusses a possible solution to this challenge: the use of benchmarks to encourage pension funds to invest with the longer-term goal of delivering adequate retirement income in mind. Examples are provided of leading pension funds that already work with long-term, outcome-based benchmarks. The paper suggests a methodology for pension regulators to use in order to incentivize pension funds in their jurisdictions to adopt a similar approach.
format Publications & Research :: Policy Research Working Paper
author Stewart, Fiona
author_facet Stewart, Fiona
author_sort Stewart, Fiona
title Proving Incentives for Long-Term Investment by Pension Funds : The Use of Outcome-based Benchmarks
title_short Proving Incentives for Long-Term Investment by Pension Funds : The Use of Outcome-based Benchmarks
title_full Proving Incentives for Long-Term Investment by Pension Funds : The Use of Outcome-based Benchmarks
title_fullStr Proving Incentives for Long-Term Investment by Pension Funds : The Use of Outcome-based Benchmarks
title_full_unstemmed Proving Incentives for Long-Term Investment by Pension Funds : The Use of Outcome-based Benchmarks
title_sort proving incentives for long-term investment by pension funds : the use of outcome-based benchmarks
publisher World Bank, Washington, DC
publishDate 2014
url http://documents.worldbank.org/curated/en/2014/05/19548017/proving-incentives-long-term-investment-pension-funds-use-outcome-based-benchmarks-proving-incentives-long-term-investment-pension-funds-use-outcome-based-benchmarks
http://hdl.handle.net/10986/18800
_version_ 1764442722647670784
spelling okr-10986-188002021-04-23T14:03:49Z Proving Incentives for Long-Term Investment by Pension Funds : The Use of Outcome-based Benchmarks Stewart, Fiona ACCOUNTING AMOUNT OF RISK ANNUITY ARBITRAGE ASSET CLASS ASSET CLASSES ASSET MANAGEMENT ASSET MANAGERS ASSET VALUE BALANCE OF PAYMENT BANK POLICY CAPITAL MARKET CAPITAL MARKET DEVELOPMENT CONFLICT OF INTEREST CONTRACTUAL SAVINGS CONTRIBUTION RATE CORPORATE BONDS CREDIBILITY DEBT DEBT FINANCING DEFERRED ANNUITY DEFINED BENEFIT DEFINED BENEFIT PENSION PLANS DEFINED CONTRIBUTION PENSIONS DEFINED CONTRIBUTION PLANS DEMOGRAPHIC DEPENDENCY RATIO DEPENDENCY RATIOS DEVELOPING ECONOMIES DIVERSIFIED PORTFOLIOS DOMESTIC GOVERNMENT BONDS DOMESTIC MARKETS ECONOMIC CRISIS EQUITIES EQUITY FUND EQUITY INVESTMENTS EQUITY RETURNS ETHICAL FUND EXPOSURE EXPOSURES EXTERNAL ASSET FINANCIAL CRISIS FINANCIAL INSTITUTIONS FINANCIAL INSTRUMENT FINANCIAL INSTRUMENTS FINANCIAL MARKETS FINANCIAL PERFORMANCE FINANCIAL SECTOR FINANCIAL SYSTEM FISCAL DEFICITS FIXED ANNUITIES FIXED INCOME FOREIGN EXCHANGE FOREIGN EXCHANGE RISK FUND MANAGEMENT FUND MANAGERS FUND PERFORMANCE FUNDED PENSION FUNDED PENSION SYSTEMS FUNDED SYSTEMS FUTURE PENSION FUTURE PENSIONS GLOBAL CAPITAL GLOBAL CAPITAL MARKETS GLOBAL EQUITIES GLOBAL EQUITY GOVERNMENT POLICY INCOMES INDEXED BONDS INDIVIDUAL ACCOUNT INDIVIDUAL ACCOUNTS INFLATION INSTITUTIONAL INVESTORS INSURANCE INTERNATIONAL BANK INTERNATIONAL DIVERSIFICATION INTERNATIONAL FINANCIAL MARKETS INVESTING INVESTMENT APPROACH INVESTMENT APPROACHES INVESTMENT CHOICES INVESTMENT DECISIONS INVESTMENT GUIDELINES INVESTMENT HORIZON INVESTMENT OPPORTUNITIES INVESTMENT PERFORMANCE INVESTMENT REGULATION INVESTMENT REGULATIONS INVESTMENT RESTRICTIONS INVESTMENT RETURN INVESTMENT RETURNS INVESTMENT RISK INVESTMENT STRATEGIES INVESTMENT STRATEGY INVESTOR PROTECTION JURISDICTION JURISDICTIONS LABOR MARKET LABOUR INCOME LEGAL FRAMEWORK LIABILITY LIQUID ASSETS LIQUIDITY LOCAL CAPITAL MARKETS LOCAL MARKET LONG-TERM INVESTMENT LONG-TERM INVESTORS MANDATORY SYSTEMS MARKET INDEXES MORTALITY NATIONAL PENSION NATIONAL PENSIONS NATIONAL SAVINGS NET RETURNS OPTIMAL INVESTMENT OPTIMAL PORTFOLIO OPTIMAL PORTFOLIOS OUTPUT PENSION PENSION ASSETS PENSION AT RETIREMENT PENSION AWARENESS PENSION BENEFITS PENSION FUND PENSION FUND ASSET PENSION FUND ASSETS PENSION FUND MANAGEMENT PENSION FUND MANAGERS PENSION FUND MEMBERS PENSION FUNDS PENSION INCOME PENSION INCOMES PENSION INVESTMENT PENSION LIABILITIES PENSION PAYMENTS PENSION PLAN PENSION PROVIDERS PENSION REFORM PENSION REFORMS PENSION REGULATION PENSION REGULATORS PENSION RESERVES PENSION SAVINGS PENSION SCHEME PENSION STATEMENTS PENSION SYSTEM PENSION SYSTEMS PENSIONERS PENSIONS PILLAR SYSTEMS PORTFOLIO PORTFOLIOS PRIVATE PENSION PRIVATE PENSION FUNDS PRIVATE PENSIONS PRIVATE PILLARS PRIVATE SECTOR DEVELOPMENT PUBLIC PENSION PUBLIC PENSIONS PUBLIC SYSTEM RATE OF RETURN RATES OF RETURN REGULATOR REGULATORS REGULATORY AUTHORITY REGULATORY BODY REGULATORY FRAMEWORK REGULATORY FRAMEWORKS REPLACEMENT RATE REPLACEMENT RATE TARGET REPLACEMENT RATES RESERVE RESERVE FUNDS RESERVE REQUIREMENT RESERVES RETIREMENT RETIREMENT AGE RETIREMENT DATE RETIREMENT FUND RETIREMENT INCOME RETIREMENT INCOME SYSTEM RETIREMENT POLICIES RETIREMENT SAVINGS RETURN RETURN ON ASSETS RETURNS RISK AVERSION RISK CONTROLS RISK MANAGEMENT RISK MANAGEMENT SYSTEM RISK PROFILE RISK PROFILES RISK-FREE RATE RISKY ASSETS SECURITIES SHORT-TERM VOLATILITY SOCIAL INSURANCE SOCIAL INSURANCE PROGRAM SOLVENCY SOVEREIGN BONDS STOCKS SUPERVISORY AGENCY SUPERVISORY AUTHORITIES SUPERVISORY AUTHORITY SYSTEMIC RISKS TAX TRANSACTION TRANSITION COUNTRIES TREASURY TREASURY BILLS TRUSTEE TRUSTEES UNDERDEVELOPED CAPITAL MARKETS VARIABLE ANNUITIES WITHDRAWAL A fundamental goal of any pension system is to ensure that members receive an adequate income when they retire. Although traditional defined benefit pension plans set out how pension income will be determined in advance and then strive to deliver this, the growing number of defined contribution plans accumulate a sum of assets which can then be turned into a pension income on retirement. However, the amount of this retirement income is not predefined This frequently leads to a focus by not only most pension providers, but also regulators and pension plan members themselves on the short-term accumulation of pension assets rather than the longer-term goal of securing an adequate retirement income. This paper discusses a possible solution to this challenge: the use of benchmarks to encourage pension funds to invest with the longer-term goal of delivering adequate retirement income in mind. Examples are provided of leading pension funds that already work with long-term, outcome-based benchmarks. The paper suggests a methodology for pension regulators to use in order to incentivize pension funds in their jurisdictions to adopt a similar approach. 2014-06-26T21:37:45Z 2014-06-26T21:37:45Z 2014-05 http://documents.worldbank.org/curated/en/2014/05/19548017/proving-incentives-long-term-investment-pension-funds-use-outcome-based-benchmarks-proving-incentives-long-term-investment-pension-funds-use-outcome-based-benchmarks http://hdl.handle.net/10986/18800 English en_US Policy Research Working Paper;No. 6885 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research