Outcome Based Diagnosis and Assessment of Private Pensions

Transcripción

1 Outcome Based Diagnosis and Assessment of Private Pensions Solange Berstein* Labor Markets and Social Security Unit Inter-american Development Bank *Opinions are personal and do not represent the opinion of the IDB or its board.

2 General Comment Outcome is what should matter: very valuable approach A comprehensive view of the pension system needs to be considered: private pensions play a role Long term view needs to be the relevant approach Supervise Private or Public Pension Providers? Supervision is critical, but policy design matters: there is no magic solution

3 What is different about supervising DC pensions? Under DC arrangement individuals bear risks (investment, longevity) May restrict/ control investment options May need to provide information for members Often competitive systems, so oversight of market discipline is key Again information to members is critical Supervision of the decumulation phase also important May prevent lump sum withdrawals May provide better transition between phases. Risk management of the funds themselves important May provide guidance Need careful oversight where individuals bear the risks, but don t have enough information or education to make sensible decisions

4 RBS: Dynamic Procedure Risk Matrix Directorio Aptitudes e idoneidad del Directorio Funcionamiento del Directorio y de los Comités de Directorio Definición y seguimiento de la política global de gestión de rie Definición de la Estrategia Política de Divulgación y Transparencia Gestión del Riesgo Reputacional Administración Composición y Estructura de la Administración Proceso de Planificación y Administración. Divulgación y Trans Sistemas de Información de Gestión Gestión de Riesgos Cultura de Gestión de Riesgos Gestión del Riesgo de Cumplimiento Gestión de Riesgo Fiduciario Riesgo Financiero Riesgo del Proceso de Inversiones Riesgo de Crédito Riesgo de Liquidez Riesgo de Mercado Riesgo de Solvencia de la Entidad Riesgo Operacional Riesgo en la Relación con los Afiliados Riesgo de Gestión de Cuentas Riesgo de Beneficios Continuidad de Negocio y Recuperación de Desastres Riesgo de Subcontratación Riesgo Tecnológico Regular Supervision Preventive Supervision Compliance Supervision Complaints

5 Information: Business Intelligence systems required for RBS In RBS Process: Manage large data base Centralized data storage Avoid using multiple calculation sheets Automatic generation of the risk matrix instead of copy/paste In summary: Assure confidence on generated results Increase data security (logistic and physical) Assure data integrity and consistency Improve information management Aggregate information for consolidated results

6 Information to Members: For Competition

7 Information to members: Future Pension

8 Regulation, supervision and enforceability RBS can and should be in place even in a rules based regulatory framework How much rules would depend on the role of the different pillars and institutional capacity Enforceability is critical and sanctions required when it is not possible to prevent a failure RBS contributes to proportionality and consistency on sanctions: But it represent challenges. Validation of procedures Evaluate what is prudent management

9 Final Remarks I did like very much a couple of sentences: For assessment it is important not only what is being said, but also what is not and what is really happening Mechanic formulas should not override good judgement Design and institution capacity Matters!

10 Long term challenges that need to define a roadmap and create the institutional capacity to build the way to the desired targets

11 Efforts from the IDB. Better Information for Policy Design Help to build better institutional capacity Inclusive Savings Project Know more about behavior towards savings and social security contributions to engage workers with pensions