The ambitious step of setting up a World Pension Association (WPA) was taken earlier this year by the European Federation of Retirement Provision (EFRP), International Federation of Pension Fund Administrators (FIAP), and a number of national associations of pension bodies.
The establishment of WPA was one of the major issues discussed during the first International Conference of Pension Funds, held in Madrid in April. This was organised on the initiative of Inverco, the Spanish association for collective investment and pension funds.
“Since Spain is a member of both the EFRP and FIAP, we suggested they hold their annual meetings in Madrid, and we organised an international conference at the same time to discuss major issues within the pension fund industry,” says Angel Martínez Aldama, Inverco’s director.
While Inverco has been a member of EFRP for nearly 20 years and for 13 of these on the executive committee, along with six others, its involvement with FIAP is much more recent. The South American body was set up about four years ago in Chile for pension fund administrators. This came as a result of the move to funded schemes on the continent, starting with Chile, followed by Peru in 1993, then by Argentina, Uruguay and others, including Mexico. “Really from the north to south of Latin America, with the notable exception of Brazil, most countries are now following with some differences the Chilean model,” he says. “Some of our members talked to us about FIAP and suggested we should make contact with it.”
In 1997, Inverco attended FIAP’s second general meeting in Peru and decided to join the federation. “We found it very useful to know how these countries moved to funded systems. And, of course, some of our members are very active in the South American countries.”
So, this year, Inverco undertook organising the general meetings of both EFRP and FIAP in Madrid, and one thing led to another. “Having decided to hold these meetings, we suggested going one step forward and organising a joint conference between their members. So we proposed this and both federations responded positively to the initiative. But we also thought that if there was a joint conference, then there should be continuity with wider co-ordination between both federations.”
While this was being considered, he says, “we also decided to invite other countries not belonging to the two federations, such as the US, Canada, Thailand and Australia.” Contact was made also with the two main Japanese associations, but because of the major changes in their pensions system, they were not able to attend. But those from the other countries came, including two of the major US associations.
The two-day conference itself went very well, with 70 delegates from 40 countries, says Martínez Aldama. Country and regional reports on the first day were followed on the second day by a number of presentations about problems and issues that are common to all countries, such as investment restrictions and safeguarding pension rights when moving cross border.
“That worked as a framework, helping countries to get to know each other and to exchange information, particularly on how problems were tackled in different countries,” he says. “I think there are many things that can be done at this level. But what is clear from the presentations is that the developments in one particular area cannot be exported to another. For example, it would be very difficult to see how the change from PAYG to a funded system on South American lines could be exported to most European countries, given the social security systems and so on.”
But he does point to the impact they have had on some central and eastern European countries already. “Some countries have to develop their financial markets and this is going to be done through their pension funds.”
At the meeting a steering committee was set up, with the EFRP and FIAP taking lead roles as the two main groupings, so the chairmen and vice chair of the European and South American associations are on this committee, as is Inverco, since the secretariat of the new body is based in Madrid, acknowledging the role played by the Spanish body in bringing this about. The Australian, Canadian, Thai and US associations are also committee members.
“This committee is to work on the issues to be considered by the new association,” says Martínez Aldama. But because of the distances, the aim will be to do as much as possible through e-mail or on occasion by tele-conferencing. The second conference of the association is to be held in Santiago, Chile. “This is very important for the Chileans, as next year is the twentieth anniversary of their new pension system.”
One of the first topics on the WPA agenda is to try to ascertain the size of assets that the member associations represent. This is quite a difficult task, he says, as even within Europe the industry is presented with a plethora of data, but it is extremely difficult to be sure about what is funded, what is PAYG, book reserve and so on. One of the first tasks should be to see if up-dated figures can be produced, with a breakdown of the assets. But this is just one of the projects in hand and others will be developed following discussions at committee level, with reports being made on common topics. “These could be helpful for the members and would be a very important commitment for this association.”
But he warns not to expect the association to have a “single voice”. “Conditions vary from country to country, and what is useful in one country could not be used in another. So several ideas might be held, as happens with the EFRP, rather than all going in one direction.”
He adds: “As a pensions association, we were very pleased to have been host to the event. But the important thing is not which country had the idea and the initiative, but that the new association should be useful for its members.”
The new association, he points out, is open to any other countries which want to join through their national associations. IPE