Chapter 5. Barriers to Integration for Pension Funds
  • 1 0000000404811396 Monetary Fund


Pension funds are becoming increasingly important in financial markets in the LA-7 (Brazil, Chile, Colombia, Mexico, Panama, Peru, and Uruguay). The size of these pension funds has surpassed 17 percent of GDP in assets under management, largely driven by growing participation following legal changes in most of the region. Brazil dominates LA-7 pension fund assets in value terms, while the Chilean pension fund industry—whose framework has often been used as a model in the region—remains the largest in relation to the country’s size. Despite the rapid growth, total assets and participation rates within the LA-7 remain below those of advanced country averages, thus strengthening expectations that LA-7 pension fund growth will continue to outstrip that of regional GDP. Countries’ regulatory frameworks restrict most pension funds to largely domestic investments, although in many cases Latin American pension funds have outgrown domestic capital markets.