Dominican Pension Funds: Investment Regulatory Review and Efficient Portfolio Frontier Determination

• DOI: 10.22533/at.ed.2162202219104

• Palavras-chave: Pension Funds

• Keywords: Pension Funds

• Abstract:

  The pension system reform in 2003 created new institutional investors. The pension fund administrators (AFP) have the objective of managing the savings accounts, for pension, of formal workers in the economy. So they must ensure two objectives. On the one hand, during the accumulation phase, carry out the optimal portfolio allocation (optimal asset allocation) that maximizes returns and minimizes risks. On the other hand, during the decumulation phase, create pension financial products that guarantee security and survival in old age. The challenge is not minor. To this end, the market, through regulatory entities, seeks to mitigate atypical behavior and ensure the achievement of pension objectives. In effect, it is regulated and supervised on three fronts: 1) industry structure, 2) fund performance, and 3) portfolio allocation. The three, in essence, are the financial pillars, on the supply side, of the pension market.