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Press Release: IMF and De Nederlandsche Bank Host Seminar on Ageing, Pension Risk Management and Financial Stability
February 15, 2007
The International Monetary Fund (IMF) and De Nederlandsche Bank (DNB, the Dutch central bank) today co-hosted a seminar on Ageing, Pension Risk Management and Financial Stability to discuss with high-level policy makers, private sector practitioners, and academics key issues related to ageing and pension risk management, which are increasingly important for global financial stability. The seminar provided a forum to exchange research findings, analyses, and policy initiatives, including a series of analytical studies by the IMF's Monetary and Capital Markets Department (MCM), which were published in the IMF's Global Financial Stability Report, and leading efforts by DNB in the area of pension supervision, as reflected in the recent adoption of a risk-based regulatory framework for pension funds in the Netherlands.
"Traditionally, financial stability analysis and considerations have focused on banks. Increasingly, not least because of demographics and the financial implications of ageing, analysts, including the IMF, are focusing on the role of non-banks in financial markets," said MCM Director Jaime Caruana in his opening remarks. He added that because of the increasing significance of the role of pension funds in the financial system, their risk management and investment strategies, as well as policy influence on these strategies, have become increasingly important to financial stability analysis.
DNB Executive Director Henk Brouwer said the time was ripe to examine these issues in an effort to make pension systems more resilient. "Important ingredients for the robustness of pension systems are transparency with regard to the obligations, in combination with well informed investment decisions," Mr. Brouwer said in his opening remarks. "The movement toward fair value reporting and risk-based solvency regulations are important incentives in this direction. And equally important, better risk management techniques will lead to a more accurate pricing of pension risks," he added.
In the first panel discussions, seminar participants discussed the impact of pension-related asset-liability management behavior on the broader financial markets and financial system, including pension risk management challenges, such as the expansion or development of certain markets, and the transfer of risk to the household sector. The second panel discussion focused on how pension funds are addressing specific regulatory, supervisory, and accounting reforms, and how their behavior can influence financial stability.
Given demographic trends around the world, the fiscal, financial market, and social challenges related to ageing are likely to increasingly dominate policy agendas, and the work outlined today by the panelists and the seminar participants will continue to influence policy decisions and financial stability analysis.
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