Rudolph, Heinz P.Holtzer, Peter2012-03-192012-03-192010-12-01https://hdl.handle.net/10986/3998The overwhelming number of contributors that have been allocated into the default option is one of the main characteristics of the Russian second pillar. This finding confirms that the level of financial literacy for most of the participants is not sufficient to make informed portfolio selections. The authors argue that the current system is perfectly consistent with a solid second pillar, but the authorities should focus their attention in the strategic asset allocation of pension funds. Since in the short and medium term it is unlikely to see improvements in financial literacy of individuals that may overcome the complexity of these decisions, the authorities can play an important role in designing default investment portfolios that can be aligned with expected replacement rates for the contributors. The current investment regulation of the default option induces investment in inefficient portfolios that are unlikely to bring returns above inflation, and probably will result in very low replacement rates for contributors. Further liberalization of the investments of the pension portfolio; improvements in the governance and supervision of the pension system; and greater certainty about the ownership of the funds are necessary steps to complete the pension reform launched in 2002.CC BY 3.0 IGOACCOUNTINGAGENCY PROBLEMALTERNATIVE INVESTMENTAMOUNT OF CAPITALANNUAL RETURNSARBITRAGEASSET ALLOCATIONASSET MANAGEMENTASSET MANAGERASSET MANAGERSBANK DEPOSITBANK DEPOSITSBANKRUPTCYBASIS POINTSBEST PRACTICESBOND ISSUANCEBORROWINGCAPITAL INFLOWSCAPITAL REQUIREMENTCAPITAL REQUIREMENTSCENTRAL BANKSCIVIL CODECOMMODITIESCOMPETITIVE MARKETCOMPETITIVE MARKETSCONFLICTS OF INTERESTCONSERVATIVE INVESTMENTCONTRIBUTIONCONTRIBUTION RATESCONTRIBUTIONSCORPORATE BONDSCORPORATE GOVERNANCECORPORATE SECURITIESCREDIBILITYDEBTDEFINED CONTRIBUTION PENSIONSDEMAND FOR GOVERNMENT SECURITIESDEPOSIT PORTFOLIODEVELOPMENT BANKDISCOUNT RATESDIVERSIFIED PORTFOLIODIVERSIFIED PORTFOLIOSDOMESTIC BANKDOMESTIC MARKETECONOMIC DEVELOPMENTEDUCATIONAL CAMPAIGNSEMERGING ECONOMIESEQUITIESEQUITY HOLDINGSEXCHANGE RATEFEE STRUCTUREFINANCIAL ADVISORSFINANCIAL CRISISFINANCIAL INSTITUTIONFINANCIAL ISSUESFINANCIAL LITERACYFINANCIAL MARKETFINANCIAL MATTERSFINANCIAL PERFORMANCEFINANCIAL SECTORFINANCIAL SECTOR DEVELOPMENTFIXED INCOMEFIXED INCOME SECURITIESFOREIGN FINANCIAL INSTITUTIONSFOREIGN INVESTORSFRAUDFUND MANAGEMENTFUND MANAGERFUND MANAGERSGLOBAL CAPITALGLOBAL CAPITAL MARKETSGOVERNMENT BONDGOVERNMENT BONDSGOVERNMENT DEBTGOVERNMENT FINANCESGOVERNMENT FINANCINGGOVERNMENT GUARANTEESGOVERNMENT PENSIONGOVERNMENT SECURITIESHOMEOWNERSHUMAN RESOURCESINCOME INSTRUMENTSINDIVIDUAL ACCOUNTINDIVIDUAL ACCOUNTSINFLATIONINFLATION INDEXINFLATION RATEINFLATION RISKINSTITUTIONAL INVESTORSINSTRUMENTINTEREST RATESINTERNATIONAL BANKINTERNATIONAL BANKSINTERNATIONAL DIVERSIFICATIONINTERNATIONAL FINANCIAL INSTITUTIONSINTERNATIONAL INVESTMENTSINTERNATIONAL PORTFOLIOINTERNATIONAL STANDARDSINVESTINGINVESTMENT ALTERNATIVESINVESTMENT DECISIONSINVESTMENT FUNDINVESTMENT HORIZONINVESTMENT INCOMEINVESTMENT POLICIESINVESTMENT POLICYINVESTMENT PORTFOLIOINVESTMENT PORTFOLIOSINVESTMENT PROCESSINVESTMENT REGULATIONINVESTMENT REGULATIONSINVESTMENT RETURNSINVESTMENT RISKSINVESTMENT STRATEGIESINVESTMENT STRATEGYINVESTMENTS IN GOVERNMENT SECURITIESLABOR FORCELEGAL FRAMEWORKLEVEL OF RISKLIFE INSURANCELIFE INSURANCE COMPANIESLIQUIDITYLOCAL BANKSLOCAL MARKETLONG-TERM INTERESTSLONG-TERM INVESTMENTLONG-TERM INVESTORSLOW COSTMANDATORY PENSION FUNDSMARK TO MARKETMARKETINGMONETARY FUNDMORTGAGEMORTGAGE BONDSMULTIPLE ASSETMUNICIPAL BONDSMUNICIPAL SECURITIESOCCUPATIONAL FUNDSOCCUPATIONAL PENSIONPENSIONPENSION ACCOUNTSPENSION ASSETSPENSION FUNDPENSION FUND ASSETPENSION FUND ASSETSPENSION FUND COMPANIESPENSION FUNDSPENSION ISSUESPENSION PRODUCTSPENSION REFORMPENSION REFORMSPENSION SAVINGSPENSION SYSTEMPENSION SYSTEMSPENSIONERSPENSIONSPOLICY RESPONSEPORTFOLIOPORTFOLIO ALLOCATIONPORTFOLIO ALLOCATIONSPORTFOLIO CHOICEPORTFOLIO DIVERSIFICATIONPORTFOLIO MANAGEMENTPRIVATE PENSIONPRIVATE PENSION FUNDSPRIVATE PENSION PLANSPRIVATE PLACEMENTSPUBLIC FINANCESPUBLIC PENSIONQUOTATION SYSTEMRAPID GROWTHRATE OF RETURNRATES OF RETURNREAL EXCHANGE RATEREGULATORY FRAMEWORKREPLACEMENT RATEREPLACEMENT RATESRESERVERESERVE REQUIREMENTRESERVESRETIREMENTRETIREMENT AGERETURNRETURNSRISK MANAGEMENTSALESSALES AGENTSSENIORSHAREHOLDERSHORT-TERM DEPOSITSSOLVENCYSOVEREIGN RISKSTAKEHOLDERSSTATE BONDSSTATE PENSIONSTATE PENSION SYSTEMSUPERVISORY AGENCYSUPERVISORY AUTHORITYSUPERVISORY BOARDTAXTERM DEPOSITSTRANSPARENCYTREASURYTREASURY BILLSVALUATIONVALUATION PROCEDURESVALUE OF CONTRIBUTIONSVARIABLE ANNUITIESWAGEWAGE GROWTHWAGESYIELD CURVEWorld Bank10.1596/1813-9450-5514