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Pension versus Participating Funds
[Penzijní versus účastnické fondy]

Author

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  • Petr Musílek

Abstract

The aim of this paper is not only to explain the role of pension funds on the global capital markets, but also to evaluate how effectively the pension funds manage entrusted retirement savings. Owing to population ageing and the debt problems of the most developed countries, as well as maturing of existing pay-as-you-go systems, there is a widespread trend in the OECD countries towards capitalized pension funds in the modern retirement system. Particular attention will be paid to the performance of pension funds in the Czech supplementary pension insurance system, which is characterized by the existence of unusual zero yield guarantee. However, the zero yield guarantee causes excessively conservative behavior of portfolio managers, which leads to negative real rates of return. The solution of institutional mistake is to eliminate the zero yield guarantee and create a new segment in the 3rd pillar in the form of participating funds.

Suggested Citation

  • Petr Musílek, 2012. "Pension versus Participating Funds [Penzijní versus účastnické fondy]," Český finanční a účetní časopis, Prague University of Economics and Business, vol. 2012(3), pages 6-17.
    • Handle: RePEc:prg:jnlcfu:v:2012:y:2012:i:3:id:14:p:6-17
    DOI: 10.18267/j.cfuc.14
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    Keywords

    Pension funds; Pension funds performance; Supplementary pension insurance; Zero yield guarantee; Participating funds; Penzijní fondy; Výkonnost penzijních fondů; Garance nulového výnosu; Účastnické fondy;
    All these keywords.

    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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