<<"In fact, the system already showed positive figures in the past month," said Francisco Montaner of investment advisory firm FIT Research. "If one looks at the situation over a long period of time, the system's numbers are positive.">>
I'd be interested to know a little more about how Chile's system works. Being a private funded (vs. unfunded -pay as you go) system it implies that the money that you put in goes into a pot with your name on it. This probably means that the ups and downs in the market directly affect the value of your pension - unlike a government pension in many developed countries which is defined benefit - that is you know what you'll be receiving.
If the pension system allows individuals to drawn down immediately upon their retirement a portion of the value of their portfolio, e.g. 25%, then anyone retiring now is going to experience a significant reduction in the size of their one-time-payoff, perhaps along with a reduction in the pension allowance in the next few years.
I suspect this will be a significant problem for workers in the developing and developed world alike, but I also wonder whether it will trigger more regulation of pension firms regarding the type and proportion of assets, principally equities, that they can hold.. Maybe Ventura can fill in my very patchy knowledge!
1 comments:
<<"In fact, the system already showed positive figures in the past month," said Francisco Montaner of investment advisory firm FIT Research. "If one looks at the situation over a long period of time, the system's numbers are positive.">>
I'd be interested to know a little more about how Chile's system works.
Being a private funded (vs. unfunded -pay as you go) system it implies that the money that you put in goes into a pot with your name on it. This probably means that the ups and downs in the market directly affect the value of your pension - unlike a government pension in many developed countries which is defined benefit - that is you know what you'll be receiving.
If the pension system allows individuals to drawn down immediately upon their retirement a portion of the value of their portfolio, e.g. 25%, then anyone retiring now is going to experience a significant reduction in the size of their one-time-payoff, perhaps along with a reduction in the pension allowance in the next few years.
I suspect this will be a significant problem for workers in the developing and developed world alike, but I also wonder whether it will trigger more regulation of pension firms regarding the type and proportion of assets, principally equities, that they can hold..
Maybe Ventura can fill in my very patchy knowledge!
Post a Comment