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Pension Funds and Infrastructure Development

Pension Funds and Infrastructure Development. USAID Pension Reform Project Bulgaria. Latin America: Multipillar Pension System. Multipillar Pension Systems. Mandatory Private Pension Funds. Voluntary Private Pension. Pay as you go. Individual accounts. AFFILIATES/ ADMINISTERED FUNDS.

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Pension Funds and Infrastructure Development

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  1. Pension Funds and Infrastructure Development USAID Pension Reform ProjectBulgaria

  2. Latin America: Multipillar Pension System

  3. Multipillar Pension Systems Mandatory Private Pension Funds Voluntary Private Pension Pay as you go Individual accounts

  4. AFFILIATES/ ADMINISTERED FUNDS

  5. Regulations for Pension Fund Investments • OBJECTIVE: That pension funds be invested in instruments capable of providing an adequate PROFITABILITY AND SECURITY to social security resources. • Must provide an adequate legal and tax framework. Social security savings must not pay taxes. • Must provide long-term flexibility. • Must provide development incentives to securities’ market. • Must allow domestic and international investments. • Must only establish maximum investment limits.

  6. Latin America: Annual Need of Investment in Infrastructure

  7. Growth of Pension Assets in Chile(1999-2010) ASSUMPTIONS:Investment return 6% real, 2% annual increase contributions, real annual increase in salaries 2%, amounts in dollars at the exchange rate of March 31, 2000. Source: FIAP, August 2000

  8. Chile: Pension Funds and Infrastructure

  9. - HOUSING AND REAL ESTATE DEVELOPMENT • Mortgage bonds $5.250 bln. • Investment funds $500 bln. (real estate) - INVESTMENT FUNDS $235 (Airport) - INFRASTRUCTURE BONDS $2,178 (High ways) - INFRASTRUCTURE BONDS $995 (Secondary roads) - WATER SUPPLY Privatized companies • Equities $1.823 bln. SOURCE: FIAP, December 1998

  10. Conclusions and Challenges • There is a great need to develop infrastructure in developing countries. • Pension Funds may constitute a source of financing infrastructure. • There is a need to develop the legal framework to allow pension funds to invest in infrastructure. • There is a need to create new financial instruments to channel pension assets in infrastructure.

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