Pension Risk and Risk Based Supervision in Defined Contribution Pension Funds
The main goal of any pension system is to ensure that members receive an adequate pension income when they retire. Whilst traditional defined benefit (DB) pension plans set out what that pension income will be in advance and then strive to deliver...
| Main Authors: | , |
|---|---|
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2014
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2014/03/19330636/pension-risk-risk-based-supervision-defined-contribution-pension-funds-pension-risk-risk-based-supervision-defined-contribution-pension-funds http://hdl.handle.net/10986/17791 |
| Summary: | The main goal of any pension system is
to ensure that members receive an adequate pension income
when they retire. Whilst traditional defined benefit (DB)
pension plans set out what that pension income will be in
advance and then strive to deliver it, the growing number of
defined contribution (DC) plans accumulates a sum of assets
which can then be turned into a pension income on
retirement. However, the amount of this retirement income is
not set in advance. In the absence of a proper regulatory
framework, feature n DC plans leads to a focus by not only
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. The paper is organized as
follows: chapter two discusses the origins of risks based
supervision and discusses the role of capital in the
alignment of incentives in financial institutions. Chapter
three discusses the concept of risk based supervision for
pension funds, and its limitations in the case of DC pension
schemes. Chapter four discusses the effectiveness of RBS
schemes in DC systems in emerging economies, and the last
section provides some lessons learned. |
|---|