Voluntary Pension Funds Research Articles

Kako tržišno učešće utiče na povećanje vrednosti investicione jedinice dobrovoljnih penzijskih fondova?

The importance of this research stems from highly concentrated markets of voluntary pension funds, on the one hand, and intensive competition pressure among market participants, on the other. The main purpose of this paper is to evaluate the static and dynamic relationship between a pension fund's market share and value of its investment unit. The research was designed to monitor the changes in the size of market share and investment units in the period from 2008 to 2017 in the funds in the Republic of Serbia. The main findings suggest that the size of market share of individual voluntary pension funds has no influence on the growth of investment unit value. Contrary to the static approach, the dynamic approach argues that the changes of market share affect the performance of voluntary pension funds. The obtained results indicate that the performances of individual pension funds do not depend on their size, but rather on their ability to occupy a larger portion of the market and increase their market share. This paper provides a systematic review of the relevant empirical literature on internal and external determinants of a pension fund's performance. It represents a significant contribution to the understanding of market factors, such as market share and value of investment units.

The Efficiency of a Supplementary Old-Age Pension System – the Case of Polish Voluntary Pension Funds

Abstract The aim of this article is to evaluate the effectiveness of voluntary pension savings plans in Poland, based on the principles of operation and rates of return of voluntary pension funds (pol. Dobrowolne Fundusze Emerytalne, DFE). The selection of those funds from a whole range of solutions available in the 3rd pension pillar is due to the fact that only this type of voluntary pension saving plan provides complete and transparent information about the actual investment policy, the composition of pension investment portfolios, and the achieved rates of return. In order to evaluate the investment policies and the effectiveness of DFEs, the following research methods were used: a literature analysis, an analysis of financial data, and basic methods of investment efficiency assessment. The results of the evaluation lead to the conclusion that despite their adoption of similar investment strategies, the DFEs have achieved very different values of effectiveness. In the years 2013-2018, selected funds achieved higher than average rates of return, while others achieved returns that were no better than the interest rates of standard bank deposits.

Challenges and Perspectives of Development of Private Pension Funds in Serbia

Following the successful implementation of the Chilean reform, the World Bank proposed a solution from three pillars of the pension system: compulsory state, compulsory private and voluntary private pension insurance. Serbia, like many other developed and undeveloped countries, has only adopted the third pillar, in addition to the already existing state. The introduction of compulsory private insurance was also considered, however, there are no market conditions or financial possibilities for achieving this idea. Voluntary pension funds in Serbia were introduced by the 2005 laws. There are seven voluntary pension funds in Serbia, managed by four management companies. So far, the funds have achieved positive yields, although due to limited investment opportunities, these rates were very modest. In addition to limited investment opportunities, one of the problems is the accumulation of funds. The problem of population savings has many sides, and it is certain that some of the causes can be sought in bad experiences from the past. The paper analyzes the limitations and possibilities for further development of private pension funds.

Analiza poslovanja dobrovoljnih penzionih fondova u Republici Srbiji

Analiza poslovanja dobrovoljnih penzionih fondova u Republici Srbiji

Incentive Elements of Household Savings in the Hungarian Tax System

<p><em>Of the regulatory systems, the tax system is one of the most important instruments for the government to encourage savings. Although tax systems are relatively stable, in fact, they are constantly changing. Taxes and their rates, as well as changes in other factors, serve to implement different tax policies. The primary purpose of the tax system is to redistribute income and enforce fairness to achieve effective results. Changes in tax laws can influence long-term savings decisions either positively or negatively. </em></p><p><em>I analized the </em><em>incentive elements of household savings in the Hungarian tax system which </em><em>applicable today and </em><em>the discounts that could be used in the past. I collected other discounts which has contact with tax system and helps long term savings. </em></p><p><em>The Hungarian state offers three possibilities of self-help for pension purposes in the personal income tax system, which are voluntary pension fund, retirement savings account and pension insurance. I compared these possibilities and analized by different point of views. Furthermore, they support health insurance and mutual funds, from 2014 onwards the government merged the discounts. In my opinion, governments play an important role in creating economic prosperity in countries.</em></p>

The development of private pensions in Serbia: caught between a generic blueprint and an unconducive local environment

Serbia is one of the rare eastern European countries that decisively dismissed the controversial pension privatisation agenda whereby mandatory private pension funds would be introduced to (partially) replace existing public pay-as-you-go (PAYG) benefits. Instead, Serbia opted for a more traditional western European approach, combining PAYG cost-containment parametric reforms with the introduction of tax-preferred supplementary private pensions. We explain that the desire for equitable intergenerational burden-sharing was one of the key factors behind the decision-making process that made Serbia diverge from regional trends and World Bank orthodoxy. Nonetheless, problems that have plagued mandatory private funds in neighbouring countries, such as excessive operating costs and undiversified portfolios, have also been prevalent in the Serbian voluntary private pension fund industry, which failed to achieve tangible labour market coverage and whose survival has been due mostly to exclusive tax privileges.

РЕФОРМА ПЕНСИОННОГО СТРАХОВАНИЯ В ХОРВАТИИ НА СОВРЕМЕННОМ ЭТАПЕ

The article analyzes the pension insurance reform in Croatia, which marked the beginning of a three-level pension system formation. The first level includes old-age pensions, disability pension and survivors pension as part of the compulsory pension insurance system. The second level includes pensions on the basis of the compulsory pension insurance with a saving element. The third level is based on the voluntary pension insurance system. The author reveals the conditions for granting non-contributory pensions, non-contributory pensions with a saving element as well as conditions for granting funded pensions. The article analyses the new formula for calculation of non-contributory (funded) pensions, which was initially introduced as part of the Pension Insurance Law in 1998. The article displays fundamental changes in the pension insurance system, which led to the formation of compulsory pension funds and non-governmental pension funds. Special attention is paid to the formation in compulsory pension funds of capitalized savings of the insured parties as part of the compulsory pension insurance and to the procedures for payment of funded pensions with a saving element. The article reveals the reasons for adopting in 2013 and 2014 of pension laws, the implementation of which will determine the improvement of the pension insurance system in Croatia. The article reviews the conditions for the formation of compulsory and voluntary pension funds. Special attention is paid to the participation of the insured parties aged up to 40 years in compulsory pension funds, which are divided into three categories depending on the extent of risk management during investing of the insured parties’ savings. Besides general scientific methods (analysis and synthesis), the author also applied in the article private law research techniques, in particular, formal logical, theoretical, comprehensive legal, historical and comparative law methods. Scientific novelty of the work is in its integrative and comprehensive approach to the analysis of the Croatian pension system development, which is formed on the basis of a three-level system of pension insurance. The analysis of the pension insurance norms and law enforcement practice in the modern period is of great scientific and practical importance. The research findings should contribute to the development of proposals on the creation in the Russian Federation of a pension system, which is adequate to the country’s modern social-economic development and which complies with the international and legal standards of social security and foreign states’ experience.

Development of Corporate Bond Markets in Emerging Market Countries: Empirical Evidence from Bosnia and Herzegovina

In the countries with developed financial markets, unlike in Bosnia and Herzegovina (BiH) and other emerging market countries (EMCs) with the so called bank-centric financial systems, corporate bonds are a rather significant alternative to the usage of bank loans for financing the development needs of the real sector of the economy (corporate sector). The new architecture of world’s financial stability with Basel III as its integral part additionally emphasizes this importance for both banks and companies. Besides, in the countries with developed financial markets it is probably needless to mention the need for high quality debt securities. This is especially true due to the conditions of stronger institutional investors on the market, such as pension funds that can realistically be expected to become the leading financial institutions of the 21st century, and ever increasing need of institutional investors, funds in particular, for high quality forms of assets and portfolio diversification. In EMCs in which pension reforms have still not been completely implemented or completed, considering a drastic fall in the ratio of the insured based on contribution payment and the number of pensioners, the existing situation is almost non-sustainable. Therefore, the transformation of pension funds in accordance to the two or three pillar structure and the emergence of voluntary pension funds as financially powerful institutional investors have no alternative. Certainly, in terms of corporate bonds and their issue on the one hand, and investing in them on the other, in EMCs and thus also in BiH there are some important aspects to be observed when analyzing their influence on the decisions on financing or investing (liquidity, interest rate level, clarity and implementation of regulations, etc.).

Pension fund governance: The Polish experience

Despite a comprehensive pension related debate held on the governmental level and in media in Poland, little time was spent, however, on discussing nature and usefulness of governance in the context of pension systems aimed at would-be-pensioners. Attention is predominantly paid to the role of governance for investments. Unfortunately, governance is not addressed, with reference to pension funds, the way it should be. The author is looking for answers to questions about the state of pension fund governance in Poland, thus trying to find methods for improvement. Nevertheless, this text concentrates on a small fragment of the pension system in Poland. The article aims at attempting identification of issues to be faced by governance in voluntary pension funds that are managed by universal pension fund management companies.

Private Pensions in Albania (The Need of a Reform According to the European Standards)

During the midlife age nobody is concerned or worried about the pensions. Years pass and pensions become our main common concern. We start questioning ourselves if we will have a sufficient pension that will allow us a good quality of life and if the amount of our monthly contributions will gave us a right pension. The background of this research was inspired from the questions that were mentioned previously and also from the fact that the work of our whole life needs to be awarded with a good pension. The supplementary income that we can have in addition to the income that derives from the payment of monthly contributions is really tempting. The investment in voluntary pensions can be a complementary asset to the actual system “pay as you go”. The purpose and the functioning of the voluntary pensions are sometimes perceived as ambiguous. The supervision institutions and the law “Voluntary Pension Funds” help the third age. We can have a major return from investing our money in the long-term; we also have a supplementary income at the moment of our retirement having the benefits of good life at an old age. The number of the contributors that have invested a part of their savings in voluntary pension funds has increased according to the recent statistical data. The quantity of the amount of individual contribution has increased too. Albanians are conscious that a part of their savings should be a long-term risk free investment. DOI: 10.5901/ajis.2013.v2n2p237

The Role of Pension Schemes in the Development of Pension Insurance Market in Serbia

The primary goal of a well-defined voluntary pension insurance system is to increase the amount of pension remunerations (pensions) to the participants, and in Serbia it supplements the compulsory pension insurance system. Payment of voluntary pension insurance contributions may be made individually, through employers, who are contributions payers for their employees, and through pension schemes. A pension scheme is a contract in favour of third parties between employers, employer associations, trade unions or professional associations and a management company, whereby the employer undertakes to make pension contribution payments for the account of its employees, or trade union members (i.e., scheme member), whereas the management company undertakes to invest the funds pooled and enable scheme members to withdraw and use such pooled funds (Law on Voluntary Pension Funds and Pension Schemes, 85/2005 and 31/2011). In Serbia, the highest amounts of contributions in the voluntary pension funds are accumulated through pension schemes. The aim of this paper is to, based on the analysis of the functioning of pension schemes, indicate the potential for greater share of pension schemes, which may result in a more rapid development of the voluntary pension system in Serbia.

Study on the dynamics of voluntary private pension fund assets in Romania

The economic and financial crisis manifested internationally has led to a drop in value of the private pension fund assets in many pension systems in the world, causing a reallocation of the investment of these assets in low risk placements. The consequence of decreasing the value of private pension fund assets on behalf of their influence factors has strong implications for the declining confidence of policyholders in these types of placements, affecting their contribution cut. In the present study, we measured the variation of the net assets of pension funds in Romania under the influence of five variables: exchange rate, loan interest rate, deposit interest rate, benchmark interest rate and stock market value index (BET-C index). We used the multiple linear regression method and we analyzed both the correlation between the dependent variable and the independent variables, and the engendering of the coefficients needed to determine the regression equation. To counter the effects of the decrease of the net asset value of the facultative pension funds, a mix of their placements, dynamic and adaptable to the variation of the influence factors shall be developed for a short time horizon. Key words: Private pensions, net assets, investments, influence factors, statistical correlations.

Venta cruzada en los fondos de pensiones colombianos: una aproximación mediante análisis de supervivencia

The development of commercial strategies for effective cross-sell pension services may be one of the biggest challenges of pension funds. The database of the members of a Colombian mandatory pension fund was used for implementing several models that describe the impact of four characteristics of members on the probability of entering the voluntary pension fund in the following month. The models are based on survival analysis techniques.

Performance evaluation, fund selection and portfolio allocation applied to colombia's pension funds

This study examines performance of mandatory and voluntary pension funds in the 2004 – 2008 period. Furthermore, we present a methodology based on principal components that can aid affiliates when selecting funds. Moreover, we examine two portfolio optimization methodologies to evaluate any performance improvements in an evaluation period when choosing a particular methodology. The first one suggested by Markowitz (1952) and the second by Reveiz and Leon (2008b). We find an increase in risk, using several metrics, of mandatory and voluntary pension funds as well as a set of funds that better characterize the common movement of funds’ returns. No evidence was found in regards to economically or statistically significant gains of applying either optimization methodology using several holding periods.

Situation and possibilities of improvement of voluntary pension insurance in Serbia as a developing country

Like many other countries, Serbia, too, has faced the necessity of introducing changes into the voluntary pension insurance. However, reforms of pension insurance in Serbia started with significant delay in comparison with almost all other countries of Eastern Europe. The key reasons for this were disintegration of previous state followed by several wars during the 1990s, the UN sanctions, and hyperinflation. All these brought the country’s economy to the verge of collapse. The Serbian insurance companies introduced voluntary pension insurance in 2002. A special law that exclusively arranges voluntary pension insurance was passed in 2005. The last five years gave us the opportunity to evaluate the performance of voluntary pension fund management companies, and this is done in this paper primarily through researches of trends of the value of the voluntary pension funds investment units. As the value of investment unit in domestic currency, dinar, does not reflect a real picture, this paper presents the calculation of the value for this indicator in euros, and in constant prices in dinars. A general conclusion is that in Serbia there is a tendency towards decreasing the real value of investment units, which has not been a stimulus both for the current and possible insureds. The paper also provides suggestions for improvement of voluntary pension system in Serbia. Key words: Voluntary pension insurance, voluntary pension fund management company, voluntary pension fund, pension plan, voluntary pension insurance in developing countries.

Determinant Factors Of The Investment Performance Of Voluntary Pension Funds In Romania

The goal of this paper is to give an overview of the voluntary private pension system.In the beginning it presents both the features and the legal framework that guide the functioning ofthese pension funds in our country and the basic descriptive data regarding the membership and theinvestments made by the funds. With the help of STATA, it carries on by analyzing the factors thatdetermine the changes in the value of the fund unit and establishing the relationship that existsbetween the funds’ total asset allocation and the value of the fund unit. Based on mathematical toolssuch as multivariate regressions it can be concluded that the investments made in deposits,government bonds and listed equity have the greatest impact on the performance of voluntarypension funds.

Evidence of active management of private voluntary pension funds in Colombia: a performance analysis using proxy ETFs

The purpose of this study is to find evidence that shows that either active management of private pension funds in Colombia actually adds value to the investors or, on the contrary, investors would achieve better results if they invested in passively managed products such as, for example, an ETF (Exchange Trade Fund). After conducting a review of data available from 30 different private pension funds in Colombia and 30 ETFs that had similar investment goals to these portfolios, our findings reveal that, using common performance indicators, a Colombian investor would have a better ROI by investing in passively managed products (ETFs) than in portfolios currently offered by voluntary pension funds in Colombia

Cómo crear un portafolio de inversión con las opciones que ofrecen los fondos de pensiones voluntarias en colombia: el caso de skandia

This case applies Markowitz methodology to find optimal portfolios built from different investment alternatives offered by Skandia's Voluntary Pension Funds taking into account different types of risk and risk aversion attitudes of investors.

Nghe An Voluntary Pension Fund: Transition to the National Scheme Policy Options

This study was realized in 2007 after the approval of the Social Insurance Law approved in 2006 and in preparation of its implementation. The law foresees the creation of a new voluntary pension fund so that all the persons who have not access to the compulsory system in Vietnam have access to the pension system. The creation of a national voluntary fund in 2008 raised questions about the possibility and conditions for the member of the local pension fund of the province of Nghe An to participate in the new system. For that purpose the Labor Institute of Social Science Affairs (ILSSA) realized in October 2007 a survey among the members of the Nghe An pension fund to investigate: Under what conditions the members of the Nghe An fund will be willing to participate in the new system? Do they need financial support to participate? Are they interested in other options? This study presents the survey, its results and policy implications.

Changing the Financing of the Lithuanian Pensions System

After the first pension reform in Lithuania, in 1995, the reforming process must continue. Important changes are needed, based on principles of old age security financing. A three‐tier system has been drafted and approved by the government as a Concept of the reform. The main change proposed as a first tier is the introduction of a national pension based on the residence principle, instead of the existing basic pension based on the insurance principle. It is expected that in this way the problem will be solved of providing protection against poverty for the increasing number of people who do not have the necessary insurance record. The second tier should be a compulsory funded system based on privately managed pension funds. Several important goals would thus be achieved: diversifying the old age security risk between pay‐as‐you‐go and funded schemes; boosting investment opportunities and encouraging financial markets to develop; offering improved incentives for the working population to contribute; and so on. The main obstacle to the introduction of the second tier is the high transition cost. The third tier would comprise voluntary pension funds: their activities should be liberated and the severe constraints on investment return removed.