IDEAS home Printed from https://ideas.repec.org/p/ris/uadewp/2008_026.html
   My bibliography  Save this paper

Are There Cost Differences in the Argentinean Pension Fund Industry? An Efficiency Frontier Analysis

Author

Listed:
  • Ferro, Gustavo

    () (Universidad Argntina de la Empresa)

  • Romero, Carlos A.

    () (Universidad Argntina de la Empresa)

Abstract

The purpose of this paper is to study the existence of differences in costs between pension fund administrators (PFAs) through the estimation of an econometric cost frontier for Argentina. Like in other eleven Latin American, and some other Central Asian and Eastern Europe countries, the social security has been privatized, and the individual accounts of defined contribution plans are managed by PFAs. The issue is relevant because of its potential regulatory implications. Cost savings (efficiency gains) could be passed-through to contributors, increasing their pension funds (that is, their pensions at retirement). The concept is applied to utilities’ regulation in countries where price-caps are applied, and an X-factor is set by the regulator to distribute the efficiency gains, but it is not the practice in privatized social security systems. In Argentina a price-cap has been introduced in pension funds markets since a 2007 reform. Though it allows the regulator to modify that cap, in doing that no provision was established for a technically acceptable methodology. We show that the use of efficiency frontiers could fill the gap, because it provides a technical tool to help in that key resource allocation decision. From the empirical work, it is found that there are important differences in efficiency among PFAs. This gives some clues to the regulator for implementing sector policies.

Suggested Citation

  • Ferro, Gustavo & Romero, Carlos A., 2008. "Are There Cost Differences in the Argentinean Pension Fund Industry? An Efficiency Frontier Analysis," UADE Working Papers 26_2008, Instituto de Economía, Universidad Argentina de la Empresa.
  • Handle: RePEc:ris:uadewp:2008_026
    as

    Download full text from publisher

    File URL: http://www.uade.edu.ar/DocsDownload/Publicaciones/4_228_1640_WPS026_2008.pdf
    File Function: Full text
    Download Restriction: no

    More about this item

    Keywords

    pension fund; Efficiency Frontier Analysis;

    JEL classification:

    • C29 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Other
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ris:uadewp:2008_026. 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: (Mariano E. Gonzalez). General contact details of provider: http://edirc.repec.org/data/ieuadar.html .

    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.

    We have no references for this item. You can help adding them by using 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.