in the Icelandic Pension Market Bjrn Z. sgrmsson - Risk & - - PowerPoint PPT Presentation

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Oct 10, 2023 34 likes •196 views

Supervisory Challenges in the Icelandic Pension Market Bjrn Z. sgrmsson - Risk & pension analyst Financial Supervisory Authority, Iceland Pension funds assets as % of GDP Pillar II - autonomous private pension 126% Pillar III -

SLIDE 1

Supervisory Challenges in the Icelandic Pension Market

Björn Z. Ásgrímsson - Risk & pension analyst Financial Supervisory Authority, Iceland

SLIDE 2

Pension funds assets as % of GDP

Pillar II - autonomous private pension 126% Pillar III - autonomous personal pension 14% Pillar III - other personal pension 8% Total 148%

SLIDE 3

Pension funds assets year 2013

2.400 261 160 500 1.000 1.500 2.000 2.500 3.000 Autonomous private pension Autonomous personal pension Other personal pension billion ISK

Pillar III Pillar II

SLIDE 4

Supervised entities assets year 2013

500 1.000 1.500 2.000 2.500 3.000 3.500 Banks Pension funds Mutual & investm. funds

Alt. Investm. funds

Insurance comp. billion ISK

SLIDE 5

Pillar II pension fund assets close to 130% of GDP

DB funds 27% DC funds 73%

SLIDE 6

Pension funds in a closed economy

SLIDE 7

Pillar II pension funds asset allocation

Deposits 5% Government bonds 41% Bonds by municipalities 6% Bonds by banks 1% Colleteral bonds 8% Mutual funds 8% Shares 27% Other bonds 4%

SLIDE 8

High exposure on bonds guaranteed by the government

Bonds guarantied by

Governm. &

Municipal. 47% Other assets 54%

2/3 are bonds issued by the Housing Financing Fund

SLIDE 9

Major trends in 2013

20 40 60 80 100 2012 2013 billion ISK

Unlisted domestic shares

50 100 150 200 2012 2013 billion ISK

Listed domestic shares 30% 80%

SLIDE 10

Elephant in the room

Deficit

SLIDE 11

Accrued actuarial deficit (close to 32% of GDP)

DB funds 86% DC funds 14%

SLIDE 12

Pension benefits

Autonomus pension funds (Pillar II) are

the main providers of pension benefits,

ffering:
Old age pension
Disability pension
Pension to surviving spouse
Pension to surviving children

SLIDE 13

Pension payments 2012 billion ISK

PAYG state pension - Pillar I 58 Pension funds - Pillar II 74 Pension funds - Pillar III 10 Depositor - Pillar III 12

Total pension excl. PAYG 96

SLIDE 14

Public and private expenditure (%/GDP) on pensions in selected OECD countries, 2011

2 4 6 8 10 12 14 16

Private Public

SLIDE 15

Future challenges

The size of the pension system
Captial control/closed economy
Sovereign risk
Increased systemic risk
Retirement saving adequacy
Sustainability

SLIDE 16