Pension Reform, Investment Restrictions and Capital Markets

Author/Editor:

Jorge Roldos

Publication Date:

September 1, 2004

Electronic Access:

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Disclaimer: This Policy Dicussion Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

Pension reform in several emerging market countries has been associated with rapid growth in assets under management and a positive impact on the development of local securities markets. However, limitations on such development may lead to asset price distortions, bubbles, and concentration of risks. Regulatory limits on pension fund investments are assessed in light of these risks and developments in modern portfolio theory. A gradual but decisive loosening of restrictions on equity and foreign investments is recommended. Changes in these regulations ought to be coordinated with measures designed to foster the development of local securities markets as well as with macroeconomic policies.

Series:

Policy Discussion Paper No. 04/4

Subject:

English

Publication Date:

September 1, 2004

ISBN/ISSN:

9781451973730/1934-7456

Stock No:

PPIEA0042004

Format:

Paper

Pages:

32

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