Český finanční a účetní časopis 2012(3):6-17 | DOI: 10.18267/j.cfuc.14

Pension versus Participating Funds

Petr Musílek
Prof. Ing. Petr Musílek, Ph.D. - profesor; Katedra bankovnictví a pojišťovnictví, Fakulta financí a účetnictví, Vysoká škola ekonomická v Praze, nám. W. Churchilla 4, 130 67 Praha 3; <musilek@vse.cz>.

The aim of this paper is not only to explain the role of pension funds on the global capital markets, but also to evaluate how effectively the pension funds manage entrusted retirement savings. Owing to population ageing and the debt problems of the most developed countries, as well as maturing of existing pay-as-you-go systems, there is a widespread trend in the OECD countries towards capitalized pension funds in the modern retirement system. Particular attention will be paid to the performance of pension funds in the Czech supplementary pension insurance system, which is characterized by the existence of unusual zero yield guarantee. However, the zero yield guarantee causes excessively conservative behavior of portfolio managers, which leads to negative real rates of return. The solution of institutional mistake is to eliminate the zero yield guarantee and create a new segment in the 3rd pillar in the form of participating funds.

Keywords: Pension funds; Pension funds performance; Supplementary pension insurance; Zero yield guarantee; Participating funds.
JEL classification: G23

Published: October 1, 2012  Show citation

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Musílek, P. (2012). Pension versus Participating Funds. Czech Financial and Accounting Journal, 2012(3), 6-17. doi: 10.18267/j.cfuc.14
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