Competition and Performance in the Polish Second PillarThis paper provides an assessment of the Polish funded pension system and the quality of the regulatory framework for the accumulation phase. There are two elements that distinguish the Polish pension fund portfolios from other reforming countries: the relatively high component of domestic equity, and the negligible component on international securities. Although this asset allocation has provided relatively high real rates of return in the past, it may not be the case in the future, as further portfolio diversification to other instruments will become necessary to ensure sustainable rates of return. The paper provides a number of recommendations to expand the opportunities of investments to pension funds. Pension fund management companies have been able to exploit scale economies in certain areas of the business, such as collection of revenues. This study proposes mechanisms to enhance them even more by centralizing also the account management system, which may also help to increase portfolio efficiency and competition. With the payout phase starting in 2009, broad definitions in areas such as the role of the public and private sector need to be established. The paper examines products and options that authorities may consider for the design of the payout phase. |
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adopted allowing Argentina assessment asset classes asset management basis points benchmark caps Chile coefficient of variation Colombia contributions contributors corporate bonds corporate governance costs covered wage bill custodian bank debt decline deficit diversified domestic equity ensure equity market equity portfolio financial instruments fixed income instruments fixed income portfolio foreign assets Hungary impose increased institutional investors interest rates internal risk management investment regime issued KNUiFE limit liquidity longevity risks ment minimum pension Minimum Return Guarantee operate OTC market PAYG payout phase pension fund managers pension fund portfolios pension reform pension system percent of GDP Poland Polsat private equity PTEs rates of return reduce reforming countries regulation regulatory framework relatively retirement products revenue Rocha second pillar sector share Sharpe Ratio shown in Figure shown in Table sion funds Source supervisory board tion Total Fees Uruguay valuation workers World Bank yield curve