APEC Pensions & Annuities Markets - 8-9 Nov 2007 - Singapore - Treasury Seminars - Asia-Pacific Economic Cooperation (APEC)

Context

This workshop is being co-hosted by Chile, New Zealand, Russia, and Singapore, with support from the IMF and forms the second part of a multi-year regional dialogue on savings and capital market development that was initiated in Hanoi in 2006. The dialogue is aimed at bringing together regulators, policy practitioners, and world class experts from the private and public sector to share experiences and examine potential ways to stimulate the development of pensions and annuities markets. Capital market development will benefit the APEC region by improving macro-economic and financial market stability in the face of aging populations and increasing regional integration.

About the Workshop

The 2007 APEC Pensions and Annuities Workshop will consider the development of pension and annuities markets within the Asia-Pacific region. Pensions, annuities, and insurance companies — institutional investors — play an important role in capital markets. The development of a strong institutional investor base within domestic and regional capital markets can:

• help economies provide for aging populations;
• aid individuals in managing risk;
• encourage the growth in long-term (contractual) savings;
• stimulate capital market development;
• generate demand for bonds and securities in primary markets;
• improve secondary market liquidity;
• encourage more efficient price setting.

There are two ways by which economies may encourage the formation of a strong and active institutional investor base. Firstly, they can generate demand for long-term savings products such as pensions through a well designed savings policy— this was considered in the 2006 workshop. Secondly, they can seek to improve the frameworks within which markets operate by improving:

• governance standards;
• risk management;
• market supervision;
• financial market regulation;
• financial analysis;
• or solvency standards.

Background

In 2006 delegates from APEC economies met to discuss the linkages between effective savings policy and the development of strong stable and efficient capital markets as part of the APEC Finance Ministers’ Process (FMP) Savings and Capital Market Development Dialogue. This workshop contributed to the APEC Voluntary Action Plan for Free and More Stable Capital Flows a multi-year initiative that has been in operation since 1999.

A key finding was that long term or contractual savings that are intermediated through private sector institutional investors can act to stimulate the speed with which capital markets develop. The growth of long-term savings and a strong institutional investor base generates demand for long-term investments such as corporate and government bonds. In this way savings policy and the development of pension and annuity markets can complement ongoing work being undertaken as part of the Asian Bond Market Initiative (ABMI).

Although many economies in the Asian-Pacific region enjoy high savings rates, there are often very low levels of long-term contractual savings and relatively weak institutional investor bases. In some economies this has led to low demand for securities and bonds. Some markets have been illiquid and volatile as a result.

Pensions and annuities markets help to promote stability within the region’s financial markets by stimulating capital market development. Well diversified capital markets are better able to absorb and weather economic shocks and are less likely to face financial crises. More stable markets create predictability and certainty for businesses operating within the region.

Target Audience

This seminar seeks participation from individuals and organisations from both the public and private sector with a strong interest in policy associated with:

• savings policy and aging populations;
• capital market development and operation;
• regulation and governance standards;
• regional integration;
• financial market stability; and
• macroeconomic performance.

Interested institutions could include Treasuries, Central Banks, Securities and Pension Supervisors, insurance and pension supervisors, as well as market participants such as stock exchanges, pension fund associations, insurance companies associations, bankers associations, brokers associations, mutual and hedge funds, investment banks, consulting firms, and accountancy firms.

Further information