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Return Simulations in the Private Pensions Industry in Peru

Author

Listed:
  • David Tuesta
  • Javier Alonso
  • Carlos Herrera
  • Jasmina Bjeletic

Abstract

This document contains a series of simulation exercises aimed at modeling returns in the private pension funds industry in Peru over the next 50 years. The results support the argument that return losses registered in Pension Funds due to the global financial crisis are part of a set of temporary phenomenon. In this way, a long-term approach offers a higher growth prospective for returns than other savings alternatives. Also, we conclude that returns vary according to the risk profile of the fund chosen by the affiliates for their contributions, and that choosing the Type 3 Fund yields higher returns, albeit through more exposure to equities and thus greater volatility.

Suggested Citation

  • David Tuesta & Javier Alonso & Carlos Herrera & Jasmina Bjeletic, 2010. "Return Simulations in the Private Pensions Industry in Peru," Working Papers 1020, BBVA Bank, Economic Research Department.
    • Handle: RePEc:bbv:wpaper:1020
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    References listed on IDEAS

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    1. Vasicek, Oldrich, 1977. "An equilibrium characterization of the term structure," Journal of Financial Economics, Elsevier, vol. 5(2), pages 177-188, November.
    2. Anna Christina D'Addio & José Seisdedos & Edward Whitehouse, 2009. "Investment Risk and Pensions: Measuring Uncertainty in Returns," OECD Social, Employment and Migration Working Papers 70, OECD Publishing.
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