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Governance and investment of sovereign and public pension reserve funds in selected OECD countries

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  • Juan Yermo

Abstract

Many countries around the world are partly prefunding their otherwise pay-as-you-go (PAYG) financed social security systems by establishing or further developing existing public pension reserve funds (PPRFs). Most OECD countries have put in place internal and external governance mechanisms and investment controls to ensure the sound management of these funds and better isolate them from undue political influence. These structures and mechanisms are in line with OECD standards of good pension fund governance and investment management. In particular, the requirements of accountability, suitability and transparency are broadly met by these reserve funds. However, some specific details of the funds’ governance and investment management could be improved in a few countries, such as enhancing the expertise in the funds’ governing boards and constraining discretionary interventions by government. Such reforms will ultimately raise the long-term investment performance of the funds and the solvency of social security systems.

Suggested Citation

  • Juan Yermo, 2008. "Governance and investment of sovereign and public pension reserve funds in selected OECD countries," OECD Journal: Financial Market Trends, OECD Publishing, vol. 2008(1), pages 133-161.
    • Handle: RePEc:oec:dafkad:5kzllc05z1nw
    DOI: 10.1787/fmt-v2008-art6-en
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    Cited by:

    1. Wang, Xue & Bohn, Frank, 2019. "Pension reserve fund, political budget cycles and fiscal illusion," European Journal of Political Economy, Elsevier, vol. 56(C), pages 62-73.
    2. Romp, Ward & Beetsma, Roel, 2020. "Sustainability of pension systems with voluntary participation," Insurance: Mathematics and Economics, Elsevier, vol. 93(C), pages 125-140.
    3. Emilio Gómez-Déniz & Jorge V. Pérez-Rodríguez & Simón Sosvilla-Rivero, 2022. "Analyzing How the Social Security Reserve Fund in Spain Affects the Sustainability of the Pension System," Risks, MDPI, vol. 10(6), pages 1-17, June.
    4. Munyambonera, Ezra & Katunze, Miriam & Munu, Martin Luther & Sserunjogi, Brian, 2018. "Expanding the Pension Sector in Uganda," Research Series 275661, Economic Policy Research Centre (EPRC).
    5. Godínez-Olivares, Humberto & Boado-Penas, María del Carmen & Haberman, Steven, 2016. "Optimal strategies for pay-as-you-go pension finance: A sustainability framework," Insurance: Mathematics and Economics, Elsevier, vol. 69(C), pages 117-126.
    6. Ashby H. B. Monk, 2008. "Is CalPERS a Sovereign Wealth Fund?," Issues in Brief ib2008-8-21, Center for Retirement Research, revised Dec 2008.
    7. Tang, Yunshu & Ruan, Yaoyun & Xu, Yongqing & Li, Yaokuang, 2020. "Feedback analysis of population, economy and pension: Moderate scale of China’s pension strategic reserve," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 551(C).
    8. Castañeda, Pablo & Castro, Rubén & Fajnzylber, Eduardo & Medina, Juan Pablo & Villatoro, Félix, 2021. "Saving for the future: Evaluating the sustainability and design of Pension Reserve Funds," Pacific-Basin Finance Journal, Elsevier, vol. 68(C).

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