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The rapid growth of the market for retirement products in Chile has its origins in the pension reform that was implemented in 1981. But the successful development of an active annuity market also reflects many other factors. This paper summarizes and updates an earlier longer study on the development of the Chilean annuity market. The update focuses on the numerous changes that were introduced in 2008. The most striking aspect of the Chilean experience is the very high rate of annuitization. This has been linked to the restrictions that have been applied to lump-sum withdrawals, the offer of inflation-protected annuities, and the robust prudential regulation of providers. But the level of annuitization has also been supported by the annuitization incentives provided to early retirees and the influence of brokers and sales agents. The recent regulatory changes have weakened the impact of the last two factors, while strengthening the demand for annuities at normal retirement.

Brokers --- Capital Markets Development --- Debt Markets --- Emerging Markets --- Finance and Financial Sector Development --- Financial Institutions --- Financial Markets --- Global Capital --- Global Capital Markets --- Inflation --- Insurance --- Insurance & Risk Mitigation --- Insurance Companies --- Insurance Premiums --- International Bank --- Non Bank Financial Institutions --- Pension --- Pension reform --- Pension reforms --- Pension System --- Pension systems --- Pensions --- Pensions & Retirement Systems --- Private Sector Development --- Prudential regulation --- Risk Management --- Risk sharing --- Social Protections and Labor

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This paper has been prepared for policy makers interested in establishing or strengthening financial strategies to increase the financial response capacity of governments of developing countries in the aftermath of natural disasters, while protecting their long-term fiscal balances. It analyzes various aspects of emergency financing, including the types of instruments available, their relative costs and disbursement speeds, and how these can be combined to provide cost-effective financing for the different phases that follow a disaster. The paper explains why governments are usually better served by retaining most of their natural disaster risk while using risk transfer mechanisms to manage the excess volatility of their budgets or access immediate liquidity after a disaster. Finally, it discusses innovative approaches to disaster risk financing and provides examples of strategies that developing countries have implemented in recent years.

Banks & Banking Reform --- Capital market development --- Debt Markets --- Developing countries --- Disbursement --- Emergency financing --- Environment --- Finance and Financial Sector Development --- Financial institutions --- Financial instruments --- Global capital --- Global capital market --- Government budget --- Hazard Risk Management --- Indebtedness --- Insurance --- Insurance & Risk Mitigation --- International bank --- International financial markets --- Liquidity --- Natural disaster --- Natural Disasters --- Public investment --- Returns --- Risk management --- Risk neutral --- Urban Development

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• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

The rapid growth of the market for retirement products in Chile has its origins in the pension reform that was implemented in 1981. But the successful development of an active annuity market also reflects many other factors. This paper summarizes and updates an earlier longer study on the development of the Chilean annuity market. The update focuses on the numerous changes that were introduced in 2008. The most striking aspect of the Chilean experience is the very high rate of annuitization. This has been linked to the restrictions that have been applied to lump-sum withdrawals, the offer of inflation-protected annuities, and the robust prudential regulation of providers. But the level of annuitization has also been supported by the annuitization incentives provided to early retirees and the influence of brokers and sales agents. The recent regulatory changes have weakened the impact of the last two factors, while strengthening the demand for annuities at normal retirement.

Brokers --- Capital Markets Development --- Debt Markets --- Emerging Markets --- Finance and Financial Sector Development --- Financial Institutions --- Financial Markets --- Global Capital --- Global Capital Markets --- Inflation --- Insurance --- Insurance & Risk Mitigation --- Insurance Companies --- Insurance Premiums --- International Bank --- Non Bank Financial Institutions --- Pension --- Pension reform --- Pension reforms --- Pension System --- Pension systems --- Pensions --- Pensions & Retirement Systems --- Private Sector Development --- Prudential regulation --- Risk Management --- Risk sharing --- Social Protections and Labor

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Despite the scale of the global financial crisis, to date it has not resulted in a sovereign debt crisis among emerging market countries. Two significant factors in this outcome are the improved macroeconomic management and public debt management in these countries over the past decade. This paper reviews the improvements in macroeconomic fundamentals and the composition of public debt portfolios in emerging market countries prior to the crisis and concludes that the policies and strategies pursued by governments provided them with a buffer when the crisis hit. Nevertheless, with the international capital markets effectively closed for over three months and domestic borrowing in many cases impacted by extreme risk aversion, government debt managers were required to adapt their strategies to rapidly changing circumstances. The paper reviews the impact of the crisis and the responses of debt managers to the drying up of international capital, decreased liquidity in markets, and sharply increased term premia. Three categories of response are identified: (i) funding from other sources to reduce pressure on market borrowing; (ii) adapting funding programs to changes in demand in the different types of securities; and (iii) implementing liability management operations to support the market. Most governments were willing to accept temporarily greater risk in their portfolios, often reversing long established strategies, at a time when financial markets were under stress. These actions contributed to the measures taken by governments to stabilize markets and prevent economies from stalling. Looking to the future, government debt managers will need to consider how they can increase the resilience of public debt portfolios for the uncertain times that lie ahead.

Banks & Banking Reform --- Capital markets development --- Currencies and Exchange Rates --- Debt crisis --- Debt Markets --- Domestic borrowing --- Emerging market --- Emerging market countries --- Emerging market economies --- Emerging Markets --- External Debt --- Finance and Financial Sector Development --- Financial crisis --- Global capital --- Global capital markets --- Government debt --- International capital --- International capital markets --- International Economics and Trade --- Liquidity --- Macroeconomic management --- Market borrowing --- Portfolios --- Private Sector Development --- Public debt --- Public debt management --- Risk aversion --- Sovereign debt

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• Reference Manager
• EndNote
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Despite the scale of the global financial crisis, to date it has not resulted in a sovereign debt crisis among emerging market countries. Two significant factors in this outcome are the improved macroeconomic management and public debt management in these countries over the past decade. This paper reviews the improvements in macroeconomic fundamentals and the composition of public debt portfolios in emerging market countries prior to the crisis and concludes that the policies and strategies pursued by governments provided them with a buffer when the crisis hit. Nevertheless, with the international capital markets effectively closed for over three months and domestic borrowing in many cases impacted by extreme risk aversion, government debt managers were required to adapt their strategies to rapidly changing circumstances. The paper reviews the impact of the crisis and the responses of debt managers to the drying up of international capital, decreased liquidity in markets, and sharply increased term premia. Three categories of response are identified: (i) funding from other sources to reduce pressure on market borrowing; (ii) adapting funding programs to changes in demand in the different types of securities; and (iii) implementing liability management operations to support the market. Most governments were willing to accept temporarily greater risk in their portfolios, often reversing long established strategies, at a time when financial markets were under stress. These actions contributed to the measures taken by governments to stabilize markets and prevent economies from stalling. Looking to the future, government debt managers will need to consider how they can increase the resilience of public debt portfolios for the uncertain times that lie ahead.

Banks & Banking Reform --- Capital markets development --- Currencies and Exchange Rates --- Debt crisis --- Debt Markets --- Domestic borrowing --- Emerging market --- Emerging market countries --- Emerging market economies --- Emerging Markets --- External Debt --- Finance and Financial Sector Development --- Financial crisis --- Global capital --- Global capital markets --- Government debt --- International capital --- International capital markets --- International Economics and Trade --- Liquidity --- Macroeconomic management --- Market borrowing --- Portfolios --- Private Sector Development --- Public debt --- Public debt management --- Risk aversion --- Sovereign debt