Advanced Search
MyIDEAS: Login

Simulations of long-term returns and replacement rates in the Colombian pension system

Contents:

Author Info

  • Javier Alonso
  • Carlos Herrera
  • Claudia Llanes Valenzuela
  • David Tuesta

Abstract

This study is a theoretical exercise for Colombia that aims to simulate a variety of scenarios under a hypothetical scheme similar to the multi-funds currently in operation in Chile, Mexico and Peru. This has been done by modeling the future movement of asset prices that are considered to be representative of equity and fixed-income using the Monte Carlo method. After making the simulations we have constructed alternative investment portfolios according to the chosen combination of equity and fixed-income, and compared and assessed them in terms of their risk-return ratio. The study emphasizes the fundamental importance of adequate contribution densities for obtaining sufficient income for old age, and the relevance of high returns, with adequate risk limitation. Another of the study’s aims is to use the new multi-fund scheme defined for Colombia as a basis for the hypotheses of different scenarios projected to 2050. These will include the composition of members’ pension fund portfolios and changes in the scheme over time, taking as a reference the life-cycle scheme operated in Mexico, as well as other compositions and profiles that participants may decide to enter into in accordance with their choice and the limits set by regulations. The results of the work confirm what has been found in other studies on the subject for the Colombian economy: that the implementation of a multi-fund system will provide pension-fund members with efficient returns in the long term, with limited volatility over time.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.bbvaresearch.com/wp-content/uploads/migrados/WP_1029_tcm348-244401.pdf
Download Restriction: no

Bibliographic Info

Paper provided by BBVA Bank, Economic Research Department in its series Working Papers with number 1029.

as in new window
Length: 31 pages
Date of creation: Dec 2010
Date of revision:
Handle: RePEc:bbv:wpaper:1029

Contact details of provider:
Web page: https://www.bbvaresearch.com/
More information through EDIRC

Related research

Keywords:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Alejandro Reveiz & Carlos León & Juan Mario Laserna & Ivonne Martínez, 2008. "Recomendaciones para la modificación del régimen de pensiones obligatorias de Colombia," ENSAYOS SOBRE POLÍTICA ECONÓMICA, BANCO DE LA REPÚBLICA - ESPE.
  2. Alejandro Reveiz & Carlos León, 2008. "Administración de fondos de pensiones y multifondos en Colombia," BORRADORES DE ECONOMIA 004598, BANCO DE LA REPÚBLICA.
Full references (including those not matched with items on IDEAS)

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:bbv:wpaper:1029. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ANGIE CAROLINA SUAREZ SALAZAR).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.