The OECD Consumer Policy Committee has approved policies on insurance and private pensions, and recommended improving risk-based supervision and promoting the participation of more insurers.
From a statement issued by the Ministry of Foreign Trade:
San José, January 31, 2018.After a technical review of the regulations in the insurance and private pension sectors (supplementary and voluntary pension schemes), the Private Insurance and Pensions Committee of the Organization for Economic Co-operation and Development (OECD) has issued a favorable ruling for the entry of Costa Rica to said Organization.
Profits of the six complementary pension fund managers that operate in Costa Rica fell by 17% between June 2016 and the same month of this year.
The figures in the report "Development and Supervision of the Pensions sector" shows that as of June 2016, the six complementary pension operators in Costa Rica reported net income of $11.8 million, while in the same month of this year, earnings dropped to $9.8 million
At the end of April 2016, assets under management grew by 5.8% compared to December 2015, equivalent to an increase of $242 million.
From a report by the Chamber of Funds in Costa Rica:
Managed assets at the end of April 2016, investment funds showed growth in assets under management of 5.8% compared to the volume that was handled in December 2015.In effect, it went from the equivalent of US $4,181,000 (December 2015) to US $4,423 million (April 2016), in other words, and there was an increase of US $242 million.This increase is explained by open-end funds, which made US $193 million, while the closed-end type, made US $49 million.
Managers from investment funds and pension in Central America will be meeting in Panama City on August 19th.
Marielena García Maritano, president of the Panamanian Chamber of Managers of Mutual Funds and Pension Funds (Casip) told Capital.com.pa that the purpose of the event is "... to give participants information about the platforms and infrastructure for the fund business. "
It is increasingly clear that the European welfare state is not sustainable and it is imperative to make reforms in order to create capitalization systems.
EDITORIAL
Latin America has made progress in these reforms, although in many of its countries, including in Central America, private pension systems are simply younger siblings to the state systems operating under the concept of intergenerational solidarity, suffering not only from limitations on the freedom of all contributors to deposit their savings in the pension fund of their choice, but also the powers of managers of these funds to invest in securities other than government ones.
The interest rate that the Government of El Salvado pays for money from the Pension Funds is not more than 1.3%, while international investors are paid more than 7%.
Ricardo Soriano, Chairman of the Committee for the Defense of Workers Pension Fund of El Salvador (Comtradefop) reported that since the year 2006, the State has forced the Pension Fund Administrators (AFP) to invest the money belonging to Salvadoran workers in Pension Certificates, initially 30% and the 45% in 2012, money which has suffered a loss greater than $938 million each year.
Banco Popular in Costa Rica plans to register bond issues in the financial markets of El Salvador, Panama and Nicaragua.
Pension funds in El Salvador and institutional investors in Nicaragua are the target for Banco Popular from Costa Rica, who plans to start three programs of issuances of debt worth $50 million.
Gerardo Abarca, financial manager of the company , told Elfinancierocr.com: "We want to internationalize the bank in terms of fundraising. We had a good experience in Panama, an already well consolidated market. We expect to leverage these new places a niche of investors with an appetite for terms of over one year. In Costa Rica , investments in accounts as well as on the National Stock Exchange, are still very short, with terms of six months to one year.
While essential infrastructure projects lack funding, the capital accumulated in pension funds only serves as a source of funding for state coffers.
In a country where the need for funds for projects that promote economic development is increasing, the resources managed by pension operators have to be invested in obsolete investment schemes, ensuring only low returns for contributors.
The government of El Salvador has lowered the proportion of the portfolio that the Pension Fund Administrators can invest in securities of foreign companies from 20% to 10%.
The Financial System of El Salvador (SSF by its initials in Spanish) stated recently that the Administrators of Pension Funds may not invest more than 10 % in bonds or securities of foreign companies registered in the country, despite the fact that these are the entities which allow Salvadorans to earn 6% interest through investments.
77% of Costa Rica state Pension Investment Fund are in bonds, whose finances in 2013 have a deficit of 5% of GDP.
Nacion.com reports that the Pensions Superintendency (SUPEN) has warned about the situation, noting that "the high background concentration of Disability, Old Age and Death (IVM) funds in a single issuer is a risk factor."
"... The balance of the pension fund's investments amounted to ¢1.2 trillion in last September.
Up until June this year, statutory and complementary pensions amounted to $3.71 billion, surpassing basic pension regimes which had $3.61 billion.
The profits that this system has accrued are due to the fact that the investments of the administered fund had returns of around 20% between June 2012 and December 2013. In this way this system became the largest in terms of the amount of resources.
The acquisition of the Costa Rican National Insurance Institute (INS)'s pension operator by the Banco de Costa Rica (BCR) has been agreed by both institutions.
The stock transfer agreement signed on June 6 includes the intention to acquire a 100% stake. This agreement is subject to compliance with certain conditions and must be approved by regulatory authorities. The news was made public when the INS informed its staff.
With different modus operandi, the governments of Costa Rica and El Salvador are degrading the future value of workers' savings deposited with Pension Operators.
EDITORIAL
In the case of Costa Rica it is the voracity with which the Treasury has to go to the stock market in order to raise money to pay for increased spending, especially on staff salaries, leading to low yields on government bonds, which in an obligatory manner make up the portfolio of the Supplementary Pension Operators (PCO), assets which are supposed to safeguard the future value of pensions.
The government of Costa Rica is promoting a legal reform that would transfer the cost of financial supervision to banking institutions, insurance companies and pension operators.
The legal amendment was included in the Bill for the Efficient Management of Public Finances already sent to the Legislature.
So far, "the Central Bank is funding 80% of the operation of the Superintendent of Financial Institutions (Sugef), the Superintendent of Securities (Sugeval), the Superintendent of Pensions (Supen) and the Superintendent of Insurance (SUGESE)," reported Nacion.com.