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Key Findings Details

Investor Behavior and Fund Performance under a Privatized Retirement Accounts System: Evidence from Chile
Elena Krasnokutskaya and Petra Todd
WP 2009-209

  • Low participation in the Chilean pension system, which is mandatory only for full-time workers in the formal sector, is due in part to the large informal sector of the economy.
  • Regulation requiring that pension fund administrators deliver a return within 2 percent¬†of the industry average encourages more risk taking than if portfolio risk were regulated.
  • Fewer people also participate in the pension plan because of the risk taking by pension firms.
  • Older and younger individuals are more averse to risk.
  • The market is efficiently served by more than one firm.