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Asset Allocation And Performance Analysis Within The Second Pillar Of The Swiss Pension System
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Book Synopsis Asset Allocation and Performance Analysis Within the Second Pillar of the Swiss Pension System by :
Download or read book Asset Allocation and Performance Analysis Within the Second Pillar of the Swiss Pension System written by and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis investigates the relationship between asset allocation, investment performance and management expenses of occupational pension funds in Switzerland. In Switzerland, as in many other developed countries, pension systems face different challenges such as an aging society, increased life expectancy, demographic changes and the unavailability of consistent risk free investments. For this reasons reforms and regulatory changes are needed in order to provide financial stability to the beneficiaries. This thesis attempts to find additional ways of lowering the pressure on the system on top of the "Retirement Reform 2020" by looking at efficiency gains through structural reforms, increased returns due to an improved asset allocation and reduced costs due to a more strict and transparent cost control. To look for the factors significantly influencing the pension system detailed data are analysed using multivariate OLS-, FE- and RE-regressions. The results support the wide-spread hypothesis that economies of scale play an important role within the second pillar. While larger funds with respect to the asset under management achieve higher returns and show lower administration costs, they have to deal with significantly higher asset management costs as a percentage of total assets. Furthermore, the results indicate that asset allocation decisions have a considerable effect on the performance of the funds. More risky assets and investments abroad in the portfolio lead on average to higher returns. Whereas investments in bonds and mortgages in the home currency slightly reduce them. A higher share of private equity markedly increases the costs of the asset management. The results of the empirical analysis show that differences towards the types of institutions do occur. Actions aiming at reducing the discrepancies between the funds are welcome and a consolidation within the occupational pension sector would help all beneficiaries.
Book Synopsis Aging, Asset Allocation, and Costs by : David S. Gerber
Download or read book Aging, Asset Allocation, and Costs written by David S. Gerber and published by International Monetary Fund. This book was released on 2007-02 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper focuses on the nexus between pension funds' balance sheet liabilities, reflecting their age profile and payments obligations, and the investment behavior and costs of these funds. The context of the analysis is the stringent regulatory framework and the highly fragmented and heterogeneous pension fund landscape in Switzerland. Detailed data from the Swiss Pension Statistic are analyzed using multivariate OLS-regressions. The evidence shows that a younger age structure and lower short-term benefits payouts are related to a higher share of equities and lower real estate holdings. Legal form, pension plan type, and size are important for administrative costs. The findings support the view that aging may lead to increased risk aversion and thus to a lower engagement of institutional investors in equities.
Book Synopsis Analysis of the Asset Allocation of Swiss Pension Funds and the Relation Between the Asset Allocation and the Coverage Ratio by : Matthias Kubli
Download or read book Analysis of the Asset Allocation of Swiss Pension Funds and the Relation Between the Asset Allocation and the Coverage Ratio written by Matthias Kubli and published by . This book was released on 2016 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis analyses the asset allocation and the relationship between the asset allocation and the cover ratio by collecting annual report data of eight of the largest Swiss pension funds from 2000 until 2014. The annual report data also allows replicating the pension fund portfolios. The intuitive chain of thought is that riskier assets lead to higher deviations in the performance and therefore to more fluctuations in the cover ratio. By using a pooled OLS regression model, this hypothesis can be supported partly. On average, 1% more investment in risky assets, lead to 0.13% more deviation in the cover ratio. However, the relationship is not very strong, since more than half of the deviation of the cover ratio is explained by the liabilities side. Therefore, the asset allocation differences need to be large in order to be able to influence the delta of the cover ratio significantly. Furthermore, even though the pension funds increasingly invest out-side of Switzerland, there is still room to increase the foreign exposure especially in equities and real estate and decrease the net currency exposure simultaneously. The risk-return analysis reveals that the pension funds of Migros and UBS are the best performing funds in terms of risk and return. The pension fund of the Canton of Zurich (BVK) exhibits a persistent underperformance.
Book Synopsis Annuities in Switzerland by : Monika Butler
Download or read book Annuities in Switzerland written by Monika Butler and published by . This book was released on 2016 with total page 110 pages. Available in PDF, EPUB and Kindle. Book excerpt: Switzerland's pension system has attracted considerable attention, mainly due to its reliance on a three-pillar structure. A relatively small pay-as-you-go system (first pillar) is complemented by a mandatory, employer-based, fully funded occupational pension scheme (second pillar). The main goal of this paper is to provide a detailed description and analysis of the Swiss pension system. Particular emphasis is placed on the second pillar and its role in the provision of old age benefits within the Swiss social security system. The paper shows, for example, that a typical individual with an uninterrupted career can expect a net (after-tax) replacement rate of at least 70 percent. Occupational pension plans are highly regulated. Minimum interest rate requirements and minimum conversion rates (at which the accumulated retirement balances are transformed into annuity streams) introduce many elements of defined benefit plans into notionally defined contribution schemes. The resulting money's worth ratios are very high (with the exception of single males). Switzerland also has a high annuitization rate by international standards (approximately 80 percent). However, due to high fragmentation of the scheme and non-uniform accounting practices, some aspects of the system are not very transparent. The paper sheds light on the financial health of the pension system and theevolution of the regulatory framework in the past two decades.
Book Synopsis The Swiss Multi-pillar Pension System by : Monika Queisser
Download or read book The Swiss Multi-pillar Pension System written by Monika Queisser and published by . This book was released on 2000 with total page 92 pages. Available in PDF, EPUB and Kindle. Book excerpt: Switzerland is the first country to have publicly articulated the benefits of a multi-pillar approach to pensions and the first OECD country to have mandated that employers provide occupational pension plans for their employees. Not surprising, the Swiss system has many unique and attractive features.
Book Synopsis The State of the Second Pillar in Light of Its Current and Future Challenges by : Emanuel Moya
Download or read book The State of the Second Pillar in Light of Its Current and Future Challenges written by Emanuel Moya and published by . This book was released on 2018 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper assessed the necessity of reforms in the second pillar of the Swiss pension system and derived recommendations for its stakeholders. The approach was a qualitative analysis of interviews conducted with second pillar experts and politicians of the Federal Assembly, complemented by a literature review and calculations. The evaluation of the financial state of the second pillar showed that the current state is sound, yet, that reforms must be undertaken. The analysis of the risk-return structure of the second pillar revealed that it has a substantially higher volatility for a similar return as compared to a BVG benchmark portfolio. The conclusion of the part on redistribution was that it is the purpose of pension funds to allow a collective of individuals to pool their insurance and financial market risks, however, not to transfer funds from active contributors to retirees. To increase the understanding of reforms of the pension system among the electorate, the awareness of financial topics must be raised by schools, employers and politicians. The paper concludes with the finding that liberalizing and depoliticizing the second pillar is critical to its future.
Book Synopsis Analysis of Wealth Redistribution in the Second Pillar of the Swiss Pension System by : Philipp Kobler
Download or read book Analysis of Wealth Redistribution in the Second Pillar of the Swiss Pension System written by Philipp Kobler and published by . This book was released on 2013 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The thesis at hand aims to analyse and quantify the predicted intergenerational redistribution in the occupational benefit plan in the context of the expected demographic change and prognosticated economic development. In a first step, the analysis focuses on the elaboration of the relevant theoretical basic knowledge and the discussion of studies computing the size of redistribution. In a second step, an EXCEL-based calculation tool is developed in order to quantify the size of intergenerational redistribution for different demographic and pension reform scenarios. Both, the analysis of existing studies and the computed redistribution results unambiguously indicate a growing financial burden on young generations and therefore a violation of the principle of intergenerational fairness. Even under favourable demographic and economic conditions, intergenerational redistribution will increase significantly, which is demonstrated by means of a sensitivity analysis. The design of the calculation tool further allows the simulation of the effects of an increase in the retirement age on the one hand, as well as of the effects of a reduction of the statutory minimum conversion rate on the other hand. The results of the simulations clearly demonstrate the suitability and long-term effectiveness of these two measures in order to mitigate the problem of intergenerational redistribution.
Book Synopsis Assessing Chile's Pension System: Challenges and Reform Options by : Samuel Pienknagura
Download or read book Assessing Chile's Pension System: Challenges and Reform Options written by Samuel Pienknagura and published by International Monetary Fund. This book was released on 2021-09-10 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: Chile’s pension system came under close scrutiny in recent years. This paper takes stock of the adequacy of the system and highlights its challenges. Chile’s defined contribution system was quite influential when introduced, and was taken as an example by other countries. However, it is now delivering low replacement rates relative to OECD peers, as its parameters did not adapt over time to changing demographics and global returns, while informality persists in the labor market. In the absence of reforms, the system’s inability to deliver adequate outcomes for a large share of participants will continue to magnify, as demographic trends and low global interest rates will continue to reduce replacement rates. In addition, recent legislation allowing for pension savings withdrawals to counter the effects from the COVID-19 pandemic, is projected to further reduce replacement rates and increase fiscal costs. A substantial improvement in replacement rates is feasible, via a reform that raises contribution rates and the retirement age, coupled with policies that increases workers’ contribution density.
Book Synopsis Evaluating the Financial Performance of Pension Funds by : Richard Hinz
Download or read book Evaluating the Financial Performance of Pension Funds written by Richard Hinz and published by World Bank Publications. This book was released on 2010-01-14 with total page 300 pages. Available in PDF, EPUB and Kindle. Book excerpt: Countries around the world are increasingly relying on individual pension savings accounts to provide income in old age for their citizens. Although these funds have now been in place for several decades, their performance is usually measured using methods that are not meaningful in relation to this long-term objective. The recent global financial crisis has highlighted the need to develop better performance evaluation methods that are consistent with the retirement income objective of pension funds. Compiling research derived from a partnership among the World Bank, the Organisation for Economic Co-operation and Development (OECD), and three private partners, 'Evaluating the Financial Performance of Pension Funds' discusses the theoretical basis and key implementation issues related to the design of performance benchmarks based on life-cycle savings and investment principles. The book begins with an evaluation of the financial performance of funded pension systems using the standard mean variance framework. It then provides a discussion of the limitations inherent to applying these methods to pension funds and outlines the many other issues that should be addressed in developing more useful and meaningful performance measures through the formulation of pension-specific benchmark portfolios. Practical implementation issues are addressed through empirical examples of how such benchmarks could be developed. The book concludes with commentary and observations from several noted pension experts about the need for a new approach to performance measurement and the impact of the recent global financial crisis on pension funds.
Book Synopsis Achieving Investment Excellence by : Kees Koedijk
Download or read book Achieving Investment Excellence written by Kees Koedijk and published by John Wiley & Sons. This book was released on 2019-04-08 with total page 328 pages. Available in PDF, EPUB and Kindle. Book excerpt: Crucial methods, tactics and tools for successful pension fund management Achieving Investment Excellence offers trustees and asset managers a comprehensive handbook for improving the quality of their investments. With a stated goal of substantially and sustainably improving annual returns, this book clarifies and demystifies important concepts surrounding trustee duties and responsibilities, investment strategies, analysis, evaluation and much more. Low interest rates are making the high cost of future pension payouts fraught with tension, even as the time and knowledge required to manage these funds appropriately increases — it is no wonder that pensions are increasingly seen as a financial liability. Now more than ever, it is critical that trustees understand exactly what contributes to investment success — and what detracts from it. This book details the roles, the tools and the strategies that make pension funds pay off. Understand the role of pension funds and the fiduciary duty of trustees Learn the tools and kills you need to build profound and lasting investment excellence Analyse, diagnose and improve investment quality of funds using concrete tools and instruments Study illustrative examples that demonstrate critical implementation and execution advice Packed with expert insight, crucial tools and real-life examples, this book is an important resource for those tasked with governing these. Achieving Investment Excellence provides the expert insight, clear guidance and key wisdom you need to manage these funds successfully.
Book Synopsis Competition and Performance in the Polish Second Pillar by : Heinz P. Rudolph
Download or read book Competition and Performance in the Polish Second Pillar written by Heinz P. Rudolph and published by World Bank Publications. This book was released on 2007 with total page 64 pages. Available in PDF, EPUB and Kindle. Book excerpt: This 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.
Book Synopsis Governance and Investment of Public Pension Assets by : Sudhir Rajkumar
Download or read book Governance and Investment of Public Pension Assets written by Sudhir Rajkumar and published by World Bank Publications. This book was released on 2011 with total page 364 pages. Available in PDF, EPUB and Kindle. Book excerpt: And key messages -- Key principles of governance and investment management -- Governance of public pension assets -- Governance structures and accountabilities -- Qualification, selection, and operation of governing bodies -- Operational policies and procedures -- Managing fiscal pressures in defined-benefit schemes -- Policy responses to turbulent financial markets -- Investment of public pension assets -- Defining the investment policy framework for public pension funds -- Managing risk for different cohorts in defined-contribution schemes -- An asset-liability approach to strategic asset allocation for pension funds -- In-house investment versus outsourcing to external investment managers -- International investments and managing the resulting currency risk -- Alternative asset classes and new investment themes.
Book Synopsis Governance and Fund Management in the Chinese Pension System by : Yu-Wei Hu
Download or read book Governance and Fund Management in the Chinese Pension System written by Yu-Wei Hu and published by International Monetary Fund. This book was released on 2009-11-01 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Chinese pension system is highly fragmented and decentralized, with governance standards, pension fund management practices, their regulation and supervision varying considerably both across the funded components of the Chinese pension system and across provinces. This paper describes the key components of the system, highlights the progress made to date and identifies remaining weaknesses, in regard to information disclosure, the governance framework and pension fund management standards.
Book Synopsis International Convergence of Capital Measurement and Capital Standards by :
Download or read book International Convergence of Capital Measurement and Capital Standards written by and published by Lulu.com. This book was released on 2004 with total page 294 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Pensions at a Glance 2009 Retirement-Income Systems in OECD Countries by : OECD
Download or read book Pensions at a Glance 2009 Retirement-Income Systems in OECD Countries written by OECD and published by OECD Publishing. This book was released on 2009-10-15 with total page 283 pages. Available in PDF, EPUB and Kindle. Book excerpt: This third edition of Pensions at a Glance updates in-depth information on the key features of mandatory pension systems—both public and private—in the 30 OECD countries, including projections of retirement income for today’s workers.
Book Synopsis Old-age Income Support in the 21st Century by : Robert Holzmann
Download or read book Old-age Income Support in the 21st Century written by Robert Holzmann and published by World Bank Publications. This book was released on 2005-01-01 with total page 246 pages. Available in PDF, EPUB and Kindle. Book excerpt: The past decade has brought an increasing recognition to the importance of pension systems to the economic stability of nations and the security of their aging populations. This report attempts to explain current policy thinking and update the World Bank's perspective on pension reform. This book incorporates lessons learned from recent Bank experiences and research that have significantly increased knowledge and insight regarding how best to proceed in the future. The book has a comprehensive introduction and two main parts. Part I presents the conceptual underpinnings for the Bank's thinking on pension systems and reforms, including structure of Bank lending in this area. Part II highlights key design and implementation issues where it signals areas of confidence and areas for further research and experience, and includes a section on regional reform experiences, including Latin American and Europe and Central Asia.
Book Synopsis Keeping the Promise of Social Security in Latin America by : Indermit S. Gill
Download or read book Keeping the Promise of Social Security in Latin America written by Indermit S. Gill and published by World Bank Publications. This book was released on 2004-10-25 with total page 368 pages. Available in PDF, EPUB and Kindle. Book excerpt: Empirical analysis of two decades of pioneering pension and social security reform in Latin America and the Caribbean shows that much has been achieved, but that critical challenges remain. In tackling this unfinished agenda, a great deal can be learned from the reform experience of countries in the region. 'Keeping the Promise,' produced by the chief economist's office for the Latin America and Caribbean region at the World Bank, evaluates policy reforms in 12 countries, points to successes and shortcomings, and proposes priorities and options for future reform.
