Pension Funds, Capital Markets, and the Power of Diversification
The potential for pension funds to contribute to capital markets and thereby economic growth has been argued on a theoretical basis and demonstrated empirically. However, reforms fostering the development of funded pension systems have not had the...
| Main Authors: | , , |
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2017
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/217121499259303193/Pension-funds-capital-markets-and-the-power-of-diversification http://hdl.handle.net/10986/27639 |
| Summary: | The potential for pension funds to
contribute to capital markets and thereby economic growth
has been argued on a theoretical basis and demonstrated
empirically. However, reforms fostering the development of
funded pension systems have not had the economic impact
hoped for in some countries. Pension fund portfolios in some
cases have remained highly exposed to shorter-term assets,
such as bank deposits and shorter-term government bonds.
This, in turn, has led to relatively low investment returns,
thereby potentially affecting income adequacy in retirement.
This paper looks at the potential regulatory hurdles to
long-term investment by pension funds, while also proposing
international diversification and the creation of domestic
investment opportunities to help portfolio diversification
and ultimately improve the delivery of secure, adequate pensions. |
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