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How the Financial Crisis Affects Pensions and Insurance and Why the Impacts Matter


  • Ian Tower
  • Gregorio Impavido


This paper discusses the key sources of vulnerabilities for pension plans and insurance companies in light of the global financial crisis of 2008. It also discusses how these institutional investors transit shocks to the rest of the financial sector and economy. The crisis has re-ignited the policy debate on key issues such as: 1) the need for countercyclical funding and solvency rules; 2) the tradeoffs implied in marked based valuation rules; 3) the need to protect contributors towards retirement from excessive market volatility; 4) the need to strengthen group supervision for large complex financial institutions including insurance and pensions; and 5) the need to revisit the resolution and crisis management framework for insurance and pensions.

Suggested Citation

  • Ian Tower & Gregorio Impavido, 2009. "How the Financial Crisis Affects Pensions and Insurance and Why the Impacts Matter," IMF Working Papers 09/151, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:09/151

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    References listed on IDEAS

    1. Juan Yermo, 2007. "Reforming the Valuation and Funding of Pension Promises: Are Occupational Pension Plans Safer?," OECD Working Papers on Insurance and Private Pensions 13, OECD Publishing.
    2. Klaus Neusser & Maurice Kugler, 1998. "Manufacturing Growth And Financial Development: Evidence From Oecd Countries," The Review of Economics and Statistics, MIT Press, vol. 80(4), pages 638-646, November.
    3. Gregorio Impavido, 2008. "Efficiency and Performance of Bulgarian Private Pensions," IMF Working Papers 08/268, International Monetary Fund.
    4. Jeannine Bailliu & Helmut Reisen, 1998. "Do funded pensions contribute to higher aggregate savings? A cross-country analysis," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 134(4), pages 692-711, December.
    5. Assar Lindbeck & Mats Persson, 2003. "The Gains from Pension Reform," Journal of Economic Literature, American Economic Association, vol. 41(1), pages 74-112, March.
    6. Colin Pugh & Juan Yermo, 2008. "Funding Regulations and Risk Sharing," OECD Working Papers on Insurance and Private Pensions 17, OECD Publishing.
    7. Holzmann, Robert & Palacios, Robert & Zviniene, Asta, 2004. "Implicit pension debt: issues, measurement and scope in international perspective," Social Protection Discussion Papers and Notes 30153, The World Bank.
    8. Impavido, Gregorio & Thorburn, Craig & Wadsworth, Mike, 2004. "A conceptual framework for retirement products : Risk sharing arrangements between providers and retirees," Policy Research Working Paper Series 3208, The World Bank.
    9. Fiona Stewart, 2007. "Benefit Security Pension Fund Guarantee Schemes," OECD Working Papers on Insurance and Private Pensions 5, OECD Publishing.
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    Cited by:

    1. Edgardo Cayon & Susan Thorp, 2014. "Financial Autarchy as Contagion Prevention: The Case of Colombian Pension Funds," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 50(03), pages 122-139, May.
    2. Aaron GeorgeGrech, 2015. "The Financial Crisis and Differences in State Pension Generosity across EU Countries," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 13(02), pages 36-41, August.
    3. Berdin, Elia, 2016. "Interest rate risk, longevity risk and the solvency of life insurers," ICIR Working Paper Series 23/16, Goethe University Frankfurt, International Center for Insurance Regulation (ICIR).
    4. Berdin, Elia & Pancaro, Cosimo & Kok Sørensen, Christoffer, 2016. "A stochastic forward-looking model to assess the profitability and solvency of European insurers," ICIR Working Paper Series 21/16, Goethe University Frankfurt, International Center for Insurance Regulation (ICIR).
    5. repec:ces:ifodic:v:13:y:2015:i:2:p:19166297 is not listed on IDEAS
    6. Cadoni, Marinella & Melis, Roberta & Trudda, Alessandro, 2017. "Pension funds rules: Paradoxes in risk control," Finance Research Letters, Elsevier, vol. 22(C), pages 20-29.
    7. Jesus Ferreiro & Felipe Serrano, 2012. "Expectations, uncertainty and institutions. An application to the analysis of social security reforms," International Review of Applied Economics, Taylor & Francis Journals, vol. 26(2), pages 253-266, October.
    8. Düll, Robert & König, Felix & Ohls, Jana, 2017. "On the exposure of insurance companies to sovereign risk—Portfolio investments and market forces," Journal of Financial Stability, Elsevier, vol. 31(C), pages 93-106.
    9. Patty Duijm & Sophie Steins Bisschop, 2018. "Short-termism of long-term investors? The investment behaviour of Dutch insurance companies and pension funds," Applied Economics, Taylor & Francis Journals, vol. 50(31), pages 3376-3387, July.
    10. Teresa Bianchi & Gernot Ebner & Raimund Korherr & Eva Ubl, 2011. "The Austrian Insurance Industry in CESEE: Risks and Opportunities from a Financial Stability Point of View," Financial Stability Report, Oesterreichische Nationalbank (Austrian Central Bank), issue 22, pages 88-106.
    11. Aaron George Grech, 2015. "The Financial Crisis and Differences in State Pension Generosity across EU Countries," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 13(2), pages 36-41, 08.
    12. Jang, Bong-Gyu & Koo, Hyeng Keun & Park, Seyoung, 2019. "Optimal consumption and investment with insurer default risk," Insurance: Mathematics and Economics, Elsevier, vol. 88(C), pages 44-56.
    13. Casper Christophersen & Juan Zschiesche, 2015. "Macroprudential Objectives and Instruments for Insurance – An Initial Discussion," EIOPA Financial Stability Report - Thematic Articles 5, EIOPA, Risks and Financial Stability Department.
    14. Michael G. Papaioannou & Joonkyu Park & Jukka Pihlman & Han van der Hoorn, 2013. "Procyclical Behavior of Institutional Investors During the Recent Financial Crisis; Causes, Impacts, and Challenges," IMF Working Papers 13/193, International Monetary Fund.
    15. Douglas, Graeme & Noss, Joseph & Vause, Nicholas, 2017. "The impact of Solvency II regulations on life insurers’ investment behaviour," Bank of England working papers 664, Bank of England.
    16. Jelena Kocovic & Tatjana Rakonjac Antic & Marija Jovovic, 2011. "The Impact of the Global Financial Crisis on the Structure of Investment Portfolios of Insurance Companies," Economic Annals, Faculty of Economics, University of Belgrade, vol. 56(191), pages 143-162, October-D.
    17. Grech, Aaron George, 2015. "Pension reforms in the 1990s and during the financial crisis: More of the same?," MPRA Paper 66894, University Library of Munich, Germany.


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