The Dominican Republic opened its doors to the pension fund industry as the host of the 2011 FIAP International Seminar (International Federation of Pension Fund Administrators) entitled “Advancing in the Strengthening and Consolidation of the Individually Funded Pension Systems.” According to FIAP, almost 200 people attended the event, including authorities of the host country, representatives of international agencies, executives of pension fund managers and insurance companies, among others, from 25 different countries in Latin America and all over the world.

This year is the tenth anniversary of the enactment of the Dominican Social Security System Law which created the Pension System in the Dominican Republic. According to the president of the Dominican Association of Pension Fund Managers (ADAFP), Kirsis Jáquez, “The main objective was to put an end to the social deficit and an unsustainable social security system.”

The Dominican Social Security System currently comprises 5 pension fund managers whose most pressing challenges are to: index pensions, improve the yield of the funds and increase the number and types of instruments the funds can invest in.
During the seminar, FIAP’s president, Guillermo Arthur, commented that the deficiencies of the PAYGO systems have been made patently evident due to the recent financial crisis. The consequences of the crisis have had a meaningful impact on the fiscal deficit of countries with such systems, which have had to introduce parametric changes to their defined benefits systems, such as increasing the retirement age and redefining social benefits.

“The workers demand compliance from their governments, and they are unable to do so,” said Arthur. “The PAYGO systems worked when populations were young, but now that the population pyramid has inverted, these systems are no longer viable. We have to move forward towards a mechanism whereby the worker finances his own pension,” he added.

“The individually funded systems,” continued Arthur “have not only had a positive impact on the financing of pensions, but they have also boosted economies, helping to generate investment in infrastructure, translating into growth for countries. The pension funds are also avid buyers of the bonds issued by the banks, which improves the credit system in general.”

The great challenge is to “Make the worker aware of the need to save from an early age; we have to awaken his interest in his pension and where his savings are being invested.”

FIAP has 19 full members, comprising the pension fund associations of different countries, and 7 collaborating members, which are institutions and companies interested in private pension systems, represented by the leading asset managers worldwide.

“FIAP has consolidated as a discussion and reference forum, not only for analyzing existing individually funded systems, but also the possible evolution and developments that are occurring in the different countries in the region,” commented Gonzalo Rengifo, the regional manager for the Iberian Peninsula and Latin America in PICTET, one of FIAP’s collaborating partners.

“The combination of the points of view and experience of the regulators together with those of the market stakeholders, the pension fund managers, is contributing to progress and improvements in the systems in the different countries, mainly benefiting the fund members through palpable improvements in their pensions,” added Rengifo.

FIAP’s social purpose is to make known, promote, defend, publish and in any way facilitate the development of savings and individual funding channeled through pension funds and managed by financial services companies and pension fund managers.

The Dominican Republic opened its doors to the pension fund industry as the host of the 2011 FIAP International Seminar (International Federation of Pension Fund Administrators) entitled “Advancing in the Strengthening and Consolidation of the Individually Funded Pension Systems.” According to FIAP, almost 200 people attended the event, including authorities of the host country, representatives of international agencies, executives of pension fund managers and insurance companies, among others, from 25 different countries in Latin America and all over the world.

This year is the tenth anniversary of the enactment of the Dominican Social Security System Law which created the Pension System in the Dominican Republic. According to the president of the Dominican Association of Pension Fund Managers (ADAFP), Kirsis Jáquez, “The main objective was to put an end to the social deficit and an unsustainable social security system.”

The Dominican Social Security System currently comprises 5 pension fund managers whose most pressing challenges are to: index pensions, improve the yield of the funds and increase the number and types of instruments the funds can invest in.
During the seminar, FIAP’s president, Guillermo Arthur, commented that the deficiencies of the PAYGO systems have been made patently evident due to the recent financial crisis. The consequences of the crisis have had a meaningful impact on the fiscal deficit of countries with such systems, which have had to introduce parametric changes to their defined benefits systems, such as increasing the retirement age and redefining social benefits.

“The workers demand compliance from their governments, and they are unable to do so,” said Arthur. “The PAYGO systems worked when populations were young, but now that the population pyramid has inverted, these systems are no longer viable. We have to move forward towards a mechanism whereby the worker finances his own pension,” he added.

“The individually funded systems,” continued Arthur “have not only had a positive impact on the financing of pensions, but they have also boosted economies, helping to generate investment in infrastructure, translating into growth for countries. The pension funds are also avid buyers of the bonds issued by the banks, which improves the credit system in general.”

The great challenge is to “Make the worker aware of the need to save from an early age; we have to awaken his interest in his pension and where his savings are being invested.”

FIAP has 19 full members, comprising the pension fund associations of different countries, and 7 collaborating members, which are institutions and companies interested in private pension systems, represented by the leading asset managers worldwide.

“FIAP has consolidated as a discussion and reference forum, not only for analyzing existing individually funded systems, but also the possible evolution and developments that are occurring in the different countries in the region,” commented Gonzalo Rengifo, the regional manager for the Iberian Peninsula and Latin America in PICTET, one of FIAP’s collaborating partners.

“The combination of the points of view and experience of the regulators together with those of the market stakeholders, the pension fund managers, is contributing to progress and improvements in the systems in the different countries, mainly benefiting the fund members through palpable improvements in their pensions,” added Rengifo.

FIAP’s social purpose is to make known, promote, defend, publish and in any way facilitate the development of savings and individual funding channeled through pension funds and managed by financial services companies and pension fund managers.