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Assessing the strictness of portfolio-related regulation of pension funds: Rethinking the definition of prudent

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  • Senderski, Marcin

Abstract

The paper features one of the most calling interrelation in today’s pension universe, namely the interplay between regulatory activity and future pensioners’ wealth. The paper attempts to explore this tradeoff, casting a closer glance solely at portfolio-related regulatory measures and investment performance of pension plans. The effort to classify and rank OECD regulatory regimes is made, which is not straightforward given the variety of unique approaches to regulation in this respect. Afterwards, a simple cross-section model is run that displays how the strictness of oversight affects the risk-return profile of pension instruments. The analysis embraces the 2001 to 2012 period, as this the period for which detailed OECD statistics are available. Conclusion and suggestions for further investigation tie up the article.

Suggested Citation

  • Senderski, Marcin, 2014. "Assessing the strictness of portfolio-related regulation of pension funds: Rethinking the definition of prudent," MPRA Paper 56610, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:56610
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    File URL: https://mpra.ub.uni-muenchen.de/56610/1/MPRA_paper_56610.pdf
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    References listed on IDEAS

    as
    1. Raffaele Della Croce, 2011. "Pension Funds Investment in Infrastructure: Policy Actions," OECD Working Papers on Finance, Insurance and Private Pensions 13, OECD Publishing.
    2. Jacob A. Bikker & Dirk W.G.A. Broeders & Dirk Jan de Dreu, 2010. "Stock Market Performance and Pension Fund Investment Policy: Rebalancing, Free Float, or Market Timing?," International Journal of Central Banking, International Journal of Central Banking, vol. 6(2), pages 53-79, June.
    3. Patrice Muller & Graham Bishop & Shaan Devnani & Mark Lewis & Rohit Ladher, 2012. "Non-bank financial institutions: assessment of their impact on the stability of the financial system," European Economy - Economic Papers 2008 - 2015 472, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    4. Srinivas, P.S. & Whitehouse, Edward & Yermo, Juan, 2000. "Regulating private pension funds'structure, performance, and investments : cross-country evidence," Social Protection Discussion Papers and Notes 23302, The World Bank.
    5. Thomas, Ashok & Spataro, Luca & Mathew, Nanditha, 2014. "Pension funds and stock market volatility: An empirical analysis of OECD countries," Journal of Financial Stability, Elsevier, vol. 11(C), pages 92-103.
    6. Raffaele Della Croce, 2012. "Trends in Large Pension Fund Investment in Infrastructure," OECD Working Papers on Finance, Insurance and Private Pensions 29, OECD Publishing.
    7. Musalem, Alberto R. & Pasquini, Ricardo, 2012. "Private pension systems : cross-country investment performance," Social Protection Discussion Papers and Notes 68937, The World Bank.
    8. Vittas, Dimitri, 1998. "Regulatory controversies of private pension funds," Policy Research Working Paper Series 1893, The World Bank.
    9. Ling-Ni Boon & Marie Brière & Carole Gresse & Bas J. M. Werker, 2013. "Regulatory Environment and Pension Investment Performance," Post-Print hal-01492619, HAL.
    10. Waldo Tapia, 2008. "Comparing Aggregate Investment Returns in Privately Managed Pension Funds: An Initial Assessment," OECD Working Papers on Insurance and Private Pensions 21, OECD Publishing.
    11. Shi, Zhen & Werker, Bas J.M., 2012. "Short-horizon regulation for long-term investors," Journal of Banking & Finance, Elsevier, vol. 36(12), pages 3227-3238.
    12. Hoevenaars, Roy P.M.M. & Molenaar, Roderick D.J. & Schotman, Peter C. & Steenkamp, Tom B.M., 2008. "Strategic asset allocation with liabilities: Beyond stocks and bonds," Journal of Economic Dynamics and Control, Elsevier, vol. 32(9), pages 2939-2970, September.
    13. Bohl, Martin T. & Lischewski, Judith & Voronkova, Svitlana, 2010. "Pension funds' performance in strongly regulated industries in Central Europe: Evidence from Poland and Hungary," ZEW Discussion Papers 10-076, ZEW - Leibniz Centre for European Economic Research.
    14. Pablo Antolín, 2008. "Pension Fund Performance," OECD Working Papers on Insurance and Private Pensions 20, OECD Publishing.
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    More about this item

    Keywords

    pension funds regulation; pension funds performance; portfolio-related regulation; regulatory impact;

    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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