Contribution of Private Fund Managers to the Accumulation of Pension Capital of the Second Tier of Latvian Pension System in 2012-2016

Larisa Bule, Liga Leitane
European Research Studies Journal, Volume XX, Issue 3A, 624-634, 2017
DOI: 10.35808/ersj/733

Abstract:

Fourteen years passed since the resources of the second tier- Mandatory State Funded Pension Scheme- were transferred from Latvian State Treasury to private fund managers. Rates of return of private fund managers in 2003-2016 were very different. The previous research of the authors showed, that in 2003-2013 an average performance of the second tier was lower, than the rates of inflation and average growth of salary. As far as crisis years were included in previous study, the aim of this paper is to assess the contribution of private fund managers to the accumulation of pension capital in post-crisis period.For the analysis of profitability 20 pension plans were divided into different groups. Then the authors analyzed the following indicators: performance of 20 pension plans in 2012-2016; profitability depending on the declared risk of pension plan; dynamics of private fund managers' fees and population opinion on Latvian pension system. Latvian indicators were compared with Lithuania and Estonia.The conclusions about the results of the analysis were drawn. On the basis of conclusions, the authors estimated the contribution of the private fund managers to the accumulation of pension capital of the second tier of Latvian pension system. In the concluding remarks of the paper the authors made proposals for increasing the contribution of private fund managers to the accumulation of capital in the Mandatory State Funded Pension Scheme. One of the main proposals is to continue the digitalization of the system. As far as Latvian system is a model for many other countries all over the world, the authors' proposals may be actual also in other countries.


Cite Article (APA Style)