Pfau, Wade Donald (2009): The Role of International Diversification in Public Pension Systems: The Case of Pakistan. Published in: Economic Issues , Vol. 14, No. 2 (September 2009): pp. 81-105.
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Pakistan’s pension system is in the process of increasing funding in anticipation of providing for a growing elderly population. The pension assets are mainly invested domestically, as it was just in January 2007 that regulations changed to allow the purchase of international assets. In this paper, we quantify how diversification of the pension funds to include world financial assets could help a great deal in improving the sustainability of Pakistan pensions by simultaneously increasing expected returns and decreasing volatility. These arguments are made using historical data, and the robustness of our findings is demonstrated using a large variety of alternative assumptions about future asset returns, risks, and correlations. We find that international diversification could dramatically help to create sustainability for Pakistan’s main public pension system available to private workers.
|Item Type:||MPRA Paper|
|Original Title:||The Role of International Diversification in Public Pension Systems: The Case of Pakistan|
|Keywords:||pension; asset allocation; financial markets; Asia; Pakistan|
|Subjects:||G - Financial Economics > G1 - General Financial Markets > G11 - Portfolio Choice; Investment Decisions
H - Public Economics > H5 - National Government Expenditures and Related Policies > H55 - Social Security and Public Pensions
G - Financial Economics > G2 - Financial Institutions and Services > G23 - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
|Depositing User:||Wade D. Pfau|
|Date Deposited:||08. Dec 2009 07:06|
|Last Modified:||12. Feb 2013 16:08|
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