Ensayos sobre POLÍTICA ECONÓMICA
Print version ISSN 0120-4483
CARLOS LEON, Alejandro Reveiz; LASERNA, Juan Mario and MARTINEZ, Ivonne. Recommendations for the Modification of Colombian Pension System Regime Alejandro Reveiz . Ens. polit. econ. [online]. 2008, vol.26, n.56, pp. 77-113. ISSN 0120-4483.
This essay evaluates the regulation related with Colombian Compulsory Pension Funds (FPO) portfolio management. Based on authors previous research and the analysis herein presented, it is concluded that applicable FPOs regime requires certain modifications. Main modifications would consist of: i) easing FPOs investments regime, since it limits managers ability to reach superior risk return combinations with greater diversification benefits; ii) to adopt a multifund scheme, which would allow managers to offer portfolios that replicate beneficiarys risk profile, and iii) to reform managers minimum required return and remuneration mechanisms, insofar they foster inefficient investment strategies. The authors consider these modifications key in order to align beneficiarys and administrators economic incentives, resulting in a more efficient pension system.
Keywords : Pension Funds Regulation; Efficient Frontiers; Multifunds; Benchmark; JEL Clasification; G18; G11; G23.