Supervising mandatory funded pension systems : issues and challenges

The regulation and supervision of pension funds is a critical part of building public confidence in a funded-pension system. This report argues that confidence is best bolstered by an independent, autonomous, and transparent supervision agency, particularly when previous systems have failed. The choice between proactive and reactive supervision depends on previous experience of self-regulation in a country's financial sector. This report examines four key areas of supervision in derail: institutional, financial, membership, and benefits control. It looks at collection of contributions, asset valuation, portfolio limits, custodianship, and benefit guarantees. New data are presented on the performance of supervision agencies in and on marketing and operation costs of new pension funds in Latin America. Comparative data for OECD (Organization for Economic Cooperation and Development) countries are also included.