Professional Documents
Culture Documents
Dimitri Vittas
Dimitri Vittas
INTRODUCTION
Difficult to undertake because of lack of detailed data, especially on performance. Need to take regional and country context into account. The structure and approach of the paper is to set out context, assess institutional record, highlight obstacles, and indicate prospects.
CONTEXT 1
Focus of paper on Egypt, Jordan, Morocco, Tunisia and Saudi Arabia. All countries effectively have mono-pillar systems. Non-state provision is limited and not well documented. Basic reliance on funded scaled premium public pillars.
CONTEXT 2
Most countries have young populations, young systems, weak capital markets. Accumulation of large reserves in some countries because of high contribution rates. Many arguments in favor of mixed multipillar systems. Strong emphasis on empirical agnosia.
EMPIRICAL AGNOSIA
Pension contracts span 60 years or more. Data covering as long as 200 years are needed for empirical verification of any system. Over such long periods, there are massive changes in production, information, financial and medical technology. Multipillar systems allow risk diversification in the face of uncertainty.
IMPACT PRECONDTIONS
Critical Mass Conducive Regulations Optimizing Behavior Pluralistic Structure
PROSPECTS 1
Need to emphasize primary objective of pension systems: payment of secure, affordable and adequate pensions. Underscore advantages of mixed multipillar systems. Financial markets exhibit persistent deviations from trend over prolonged periods.
PROSPECTS 2
Develop depth and efficiency of financial markets to instill confidence and trust. Strengthen regulation and supervision. Enhance transparency and external scrutiny.
PROSPECTS 3
Establish independent investment committees. Set objective criteria for selection of asset managers, including foreign experts. Hire efficient custodial services for safekeeping of assets and monitoring of performance. Set guidelines for asset allocation. Emphasize diversification and market returns. Use asset swaps for international diversification.
PROSPECTS 4
Encourage pluralistic structure, competition, innovation and efficiency. Decentralize asset management. Authorize contracting out of employers and/or employees, for part of benefits. Create robust regulation and proactive supervision.