Individually-funded programs and their role in the improvement of - - PowerPoint PPT Presentation
Individually-funded programs and their role in the improvement of pensions and the economic development GUILLERMO ARTHUR FIAPs PRESIDENT PRESENTATION PREPARED FOR THE KYIV INTERNATIONAL ECONOMIC FORUM 2016 (KIEF), TO BE HELD ON OCTOBER 6TH
GUILLERMO ARTHUR FIAP’s PRESIDENT
PRESENTATION PREPARED FOR THE KYIV INTERNATIONAL ECONOMIC FORUM 2016 (KIEF), TO BE HELD ON OCTOBER 6TH AND 7TH, 2016 IN KYIV, UKRAINE.
Elderly (65+) in 2015 & 2050
(% of the population)
Source: World Population Prospects: The 2015 Revision (UN Population Division, 2016).
Unreported Pension Debt 2009-2010 (% GDP)
Unreported debt of countries that adopted individually- funded pension programs will disappear over time. Almost 9 times the country’s production within a year
* For Ukraine, World Bank estimations, 2004. ** For Chile, Mexico and Peru, World Bank estimations, 2010. Source: Edwards (2010) and World Bank (2004).
Source: FIAP, Dec. 31, 2015
LA LATAM Average = = 7.31 7.31%
Real historical cumulative profitability (annualized) of Pension Funds –Dec. 2015
Chile
In Chile, funds have the 34% of the stock of national debt; 58% of the financial system’s debt; 37% of the companies’ bonds; 6% of stock.
Source: Elaborated by FIAP on Dec 31, 2015.
Pension Funds’ Portfolio per economic sector (Dec. 2015)
Source: FIAP, Dec. 31, 2015. State 35% 35% Corpor
13% 13% Financial al 15% 15% For Foreign 33% 33% Oth thers 4% 4%
Co Colombia ia
State 23% 23% Corpor
15% 15% Financial al 18% 18% For Foreign 44% 44% Oth thers 0% 0%
Chile Chile
State 47% 47% Cor
32% 32% Financial al 2% 2% For Foreign 16% 16% Oth thers 3% 3%
Me Mexic ico
State 18% 18% Corpor
e 23% 23% Financial al 19% 19% For Foreign 40% 40% Oth thers 0% 0%
Per eru
It is possible due to the increasing reduction of the public sector deficit (as a result of financing an unsustainable PAYGO system). The period of
tion deficit it in in Chile le is is over: deficit reached a maximum of 4% of GDP until 2000, then it decreased to a 2.6% of the GIP and it will disappear in the long term (in 2050 the deficit will disappear according to Arenas et al., 2009).
A direct benefit that it is being harvested: release of state resources for strengthening the “Pillar Zero” (solidarity pension system created by the Reform of 2008).
Source: SURA (2013) , “Role of the private pension system in the economic development of Latin America, experiences of Colombia, Mexico, Chile and Peru”.
4,21% 3,97% 2,09% 5,02% 0,37% 0,58% 0,31% 0,33%
0,00% 1,00% 2,00% 3,00% 4,00% 5,00% 6,00% Chile Colombia Mexico Peru
Role of individually-funded systems in GDP annual growth
Rest Impact on Individually Funded System
4,58% 4,55% 2,40% 5,35%
Total GDP Growth Total GDP Growth Total GDP Growth Total GDP Growth
Reform's effect on GDP Reform's effect
Reform's effect
Reform's effect on GDP
% of GDP annual growth explained by pension reform
8.08% 12.75% 12.92% 6.22%
(i) Housing: About one milli lion and a half houses are financed with Pension Funds (PFA and Life Insurance Co. through the bank). Mortgage loans are offered for terms of up to 30 years. (ii ii) Infrastructure: About US$ 7.000 millon
sector, US$ 630 millon in telecommunications sector, and about US$ 2.000 millon are invested
concessions (highways, airports, hospitals).
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