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FIAP > Boletín – Recientes > Pension Notes No. 71 – Diversification of pension fund investments the Dominican experience / May 2023
17 August, 2023

Pension Notes No. 71 – Diversification of pension fund investments the Dominican experience / May 2023

Pension fund (PF) investments have had a significant impact on economic development and job creation in the countries of the region where individually funded systems have been incorporated, generating a virtuous circle to improve the returns of workers’ funds. The FIAP 2022 seminar addressed the successful experience of the Dominican Republic in creating local investment instruments, which sets a good example for other countries in the region. Among the panelists that reviewed the main aspects of the Dominican experience we can highlight:

  1. Yamil Isaías – Pioneer Investment Funds: The investments made with the contribution of the AFPs have generated more than 6,000 direct and indirect jobs, projecting 10,000 additional jobs in the next 2 to 3 years. The PFs own a free zone park with more than 3.3 million square feet, which generates 2,000 jobs. In addition, corporate buildings were built in the city of Santo Domingo, a shopping center in Punta Cana and a network of bank branches.
  2. Felipe Amador – Advanced Asset Management: Thanks to the AFPs, investments have been financed such as the purchase of 100% of the shares of Grupo Bolin and Pan Pepín in 2019, which has generated more than 400 new direct jobs; 6 ambulatory health centers, which will generate 200 direct and 1,000 indirect jobs; and the Empresa Minera Dominicana de Cales (DOCALSA), which allowed reducing operating costs and carbon emissions, achieving a return of 16.5% in dollars.
  3. Elianne Vílchez – DR Stock Exchange: The PFs own 41% of the securities in the Dominican securities market. Investment was initially channeled into sovereign debt while opportunities arose for the AFPs to invest more in the private sector and be able to better balance their portfolios. When comparing the nominal return of the PFs with the weighted average interest rate of the system, an extraordinary performance of AFPs is observed. The next step to maintain those returns, energize the market and continue to grow the economy, is to develop instruments focused on environmental and social sustainability.

To learn more about these and other experiences, review this pension note here.

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