General Trends in Competition Policy and Investment Regulation in Mandatory Defined Contribution Markets in Latin America

General Trends in Competition Policy and Investment Regulation in Mandatory Defined Contribution Markets in Latin America

Following Chile's pension reform in 1981, a wave of multi-pillar pension reforms took place in Latin America (LAC). Their implementation has revealed new policy challenges. To shed light on these issues, this paper reviews the structure and pe...

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Bibliographic Details
Main Authors:	Dayoub, Mariam, Lasagabaster, Esperanza
Format:	Policy Research Working Paper
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	ASSET ALLOCATION ASSET CLASS ASSET CLASSES ASSET MANAGEMENT ASSET MANAGERS ASSET PORTFOLIOS BANK BONDS BARRIERS TO ENTRY BASIC PENSION BASIS POINTS BOND BOND FUNDS BORROWING CAPITAL MARKET CAPITAL MARKET DEVELOPMENT CAPITAL REQUIREMENTS CENTRAL BANK COMMERCIAL BANKING COMMERCIAL BANKS COMPETITIVE MARKETS CONFLICTS OF INTEREST CONSUMERS CONTRIBUTION CORPORATE BONDS DEBT DEBT FINANCING DEBT INSTRUMENTS DEBTS DEPOSITS DERIVATIVES DEVALUATION DISABILITY DISABILITY INSURANCE DIVERSIFIED MARKET DOMESTIC BOND DOMESTIC BOND MARKET DOMESTIC BOND MARKETS DOMESTIC CAPITAL DOMESTIC CAPITAL MARKET DOMESTIC CAPITAL MARKETS DOMESTIC EQUITIES DOMESTIC EQUITY EARLY RETIREMENT EARNINGS ECONOMIC SHOCKS EMERGING ECONOMIES EMERGING MARKETS EMPLOYER CONTRIBUTIONS ENTRY BARRIERS EQUITY MARKETS EXPENDITURES FINANCIAL ASSET FINANCIAL ASSETS FINANCIAL DEVELOPMENT FINANCIAL HEALTH FINANCIAL INSTITUTION FINANCIAL INSTITUTIONS FINANCIAL MANAGEMENT FINANCIAL MARKETS FINANCIAL SUSTAINABILITY FISCAL DEFICITS FISCAL POLICIES FISCAL SUSTAINABILITY FOREIGN INSTRUMENTS FOREIGN INVESTMENT FOREIGN INVESTMENTS FUND MANAGEMENT FUND MANAGER FUND MANAGERS GOVERNMENT BONDS GOVERNMENT SECURITIES HOLDING HOLDINGS HOUSING FINANCE INCOME INCOME INSTRUMENTS INCOME SECURITIES INDIVIDUAL ACCOUNTS INDIVIDUAL RETIREMENT INDIVIDUAL RETIREMENT ACCOUNTS INDIVIDUAL SAVINGS INFLATION INSTITUTIONAL INVESTORS INSTRUMENT INSURANCE INSURANCE COMPANIES INSURANCE PREMIUMS INTEREST RATE INTERNATIONAL BANK INTERNATIONAL SETTLEMENTS INVESTMENT ALTERNATIVES INVESTMENT CHOICES INVESTMENT FUNDS INVESTMENT MANAGEMENT INVESTMENT OPPORTUNITIES INVESTMENT PERFORMANCE INVESTMENT REGIME INVESTMENT REGIMES INVESTMENT REGULATION INVESTMENT REGULATIONS INVESTMENT RESTRICTIONS INVESTMENT RETURNS IRA IRA CONTRIBUTION ISSUANCES LABOR MARKET LACK OF COMPETITION LEGAL FRAMEWORK LEGAL REFORM LEGAL REFORMS LEVY LIQUIDITY LITERACY LONG-TERM INVESTMENTS LONG-TERM SAVINGS LOW INCOME LOW-INCOME LOW-INCOME WORKERS MACROECONOMIC CONDITIONS MACROECONOMIC ENVIRONMENTS MACROECONOMIC POLICIES MACROECONOMIC STABILITY MANDATORY PENSION FUND MARKET CONCENTRATION MARKET DEVELOPMENTS MARKET SHARE MARKET STRUCTURE MARKETING MARKETS DATABASE MATURE MARKETS MATURITY MINIMUM CAPITAL REQUIREMENTS MINIMUM PENSION MONEY MARKET MORAL HAZARD MORTGAGE MORTGAGE BONDS MULTI-PILLAR PENSION SYSTEM MULTI-PILLAR PENSION SYSTEMS MUTUAL FUND MUTUAL FUNDS OCCUPATIONAL SCHEMES PENSION PENSION ARRANGEMENTS PENSION ASSETS PENSION COVERAGE PENSION FUND PENSION FUND ADMINISTRATORS PENSION FUND ASSETS PENSION FUNDS PENSION PROVIDERS PENSION REFORM PENSION REFORMS PENSION SCHEME PENSION SCHEMES PENSION SYSTEM PENSION SYSTEMS PENSIONS PERSONAL PLANS POLITICAL UNCERTAINTIES POOR INVESTMENT PORTFOLIO PORTFOLIO ALLOCATION PORTFOLIO DIVERSIFICATION PORTFOLIO PERFORMANCE PORTFOLIOS PRICE VOLATILITY PRINCIPAL-AGENT PROBLEMS PRIVATE BOND PRIVATE BONDS PRIVATE PENSION PRIVATE PENSION FUND PROPERTY RIGHTS PUBLIC PENSION PUBLIC SECTOR BONDS RATE OF RETURN RATES OF RETURN REGULATORY FRAMEWORK REGULATORY FRAMEWORKS REPAYMENT REPLACEMENT RATES RESERVE RESERVE FUND RESERVES RETIREMENT RETIREMENT BENEFITS RETIREMENT INCOME RETIREMENT SAVING RETURN RETURNS RISK FACTOR RISK PROFILES RISK SHARING SAFETY NET SALES SALES AGENTS SELF-EMPLOYMENT SHARE OF ASSETS SHAREHOLDERS SOCIAL ASSISTANCE SOCIAL SECURITY STOCK MARKET STOCK MARKET CAPITALIZATION STOCK MARKETS STOCKS SUPERVISORY AGENCY TAX TAX RATE TIME DEPOSITS TRANSPARENCY UNDERDEVELOPED CAPITAL MARKETS UNEMPLOYMENT VOLUNTARY SAVINGS WAGE WITHDRAWAL WORKING AGE ZERO COUPON ZERO COUPON BONDS
Online Access:	http://documents.worldbank.org/curated/en/2008/09/9856803/general-trends-competition-policy-investment-regulation-mandatory-defined-contribution-markets-latin-america http://hdl.handle.net/10986/6972

Description
Summary:	Following Chile's pension reform in 1981, a wave of multi-pillar pension reforms took place in Latin America (LAC). Their implementation has revealed new policy challenges. To shed light on these issues, this paper reviews the structure and performance of mandatory DC pillars in LAC. The review highlights three important points. First, it suggests overall positive outcomes from reforms in the LAC countries that implemented multi-pillar pension systems. There is, however, scope for increasing efficiency. Second, management fees have declined but remain relatively high whereas decreases in operational costs have only been partially passed through to consumers reflecting inadequate competition. Limits on transfers and related measures have been ineffective in curtailing management fees but created new barriers to entry. In recent years, a few countries in LAC introduced or are in the process of introducing a combination of new measures that focus more directly on the two root causes of inadequate competition - the inelasticity of demand to fees and selective elimination of barriers to entry by facilitating unbundling of services. These new measures show some promise. Third, the paper's review indicates that a greater diversification of pension fund portfolios in LAC appears to be necessary. Portfolio concentration owes to the adoption of strict quantitative investment regulations, underdeveloped capital markets and volatile macroeconomic environments. A gradual relaxation of these restrictions is now in progress in several countries. Regulators have become more conscious of the costs imposed by such regulations and macroeconomic conditions have improved. Greater overseas diversification seems inevitable given the development stage of local capital markets.

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