Maximizing Returns: Governance and Components of Pension Systems
Explore the governance and components of pension systems, focusing on maximizing returns for workers. Learn about the cost structure, operational models, and different approaches in countries like Mexico, Costa Rica, and Peru.
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Presentation Transcript
Components of the cost of the pension system The interestof governmentsas sponsors of the pension systems will always be to maximize the return for the workers. Thats why we focus in reduce commisions by a cost reduction. Cost structureof the pension system Where: Income: Cop: Operationalcost Cac: Customersservice cost Ccom: Comercial cost Cadm: Administationalcost Otros: Other associatedcosts u: Utility Income = Cop + Cac + Ccom + Cadm y otros + u Operational model of the system Competitive model of the system In this equation PROCESAR adds value to the Mexican Pension System.
Independent Operational Model Theexecutionof the4 typesof generictransactions(collection, porting, retirement and register or enrollment) are coordinatedbetweenthePensionFund Administrators(AFP s) basedon normativereferencesand serviceagreements. (Salvador, Peru and Bolivia) Annuities Employee Register Porting Programmed withdrawals Annuities Insurance company AFP1 AFPn Register Porting Investment Investment Employer Collecting The AFP s guarantee the uniqueness of the employee s individual account, employer compliance, resource investment, the adequate transfer of accounts and the withdrawal application.
Centralized Collection Method (Chile and Costa Rica) The figure of the collector coordinatesthe billing and the flow of contributions, and the other 3 generic transcactions are coordinated betweenthe AFP s. Employee Annuities Register Collection Porting Programmed withdrawals Withdrawals AFP1 AFPn Insurance Register Porting Investment Investment Central collector Employer Collection The AFP s guarantee the uniqueness of the employee s individual account, resource investment, the adequate transfer of accounts and the withdrawal application.
Model with Central Transactional Controller (M xico and Dominican Republic) This model is based on the existenceof a central data base, from wherethe four generic transactionsare coordinated. Employee Enrollment Transactions Programmed withdrawals Annuities Mexico supported Dominican Republic in the design and implementation of their model. Withdrawals Central Operating entity. AFP1 AFPn Aseg Register Transactions Collection Withdrawals Register Transactions Collection Withdrawals Collection Employer The operator in this base is the guarantor of uniqueness of the Individual Account and of the timely and fair concurrence of all the processes without attending balance of the accounts, investments, commercial and services matters.
Average Duration of the Processes. Enrollm ent Country model Collection Porting Withdrawals I. Independent Operational Model - Peru 15 Days 30 Days 90 Days 45 Days II. Centralized Collector Model - Costa Rica 15 Days 8 Days 80 Days 40 Days III. Independent Operational Model - M xico - New model 30 Days* 1 Day 3 Days 3 Days 1 Day 5 mins (auto enroll ment) 3 Days 3 mins (voluntary savings) 6
Governance: Stakeholders SOCIAL SECURITY INSTITUTIONS (public and private) FEDERAL GOVERNEMENT BANKOF MEXICO Finance Treasury Regulator PaymentCenters RENAPO (NIA) IMSS ISSSTE INFONAVIT FOVISSSTE Pension Funds Administrator (trustees). OWNERS. Chamber Mobile PFA E-SAR BANKS (custodians) XXI BANORTE PRINCIPAL INBURSA AZTECA PROFUTURO SURA CITIBANAMEX INVERCAP COPPEL CITI BANCOMER SCOTIABANK BANORTE BAJ O BANAMEX SANTANDER HSBC AFIRME SIRI SARTEL PENSIONISSSTE COMMERCIAL NETWORKS. RETAILERS. CONVENIENCE STORES. E MONEY INSURANCE COMPANY OTHERS (services) 7/eleven Millas para el retiro Red de la Gente Guga 21 Bansefi Farmacias del Ahorro SWAP Transfer Telecom m Chedraui Walmart BANORTE BANCOMER PROFUTURO SURA INFONACOT ISSEMYM Procesar interacts directly with 49 participants in the system as well as with more tan 600 payment centres and more tan 7 million workers through the e-SAR web, Afore M vil App and SARTEL.
Governance: Internal The leadership is both a convictionand a need as a Company. It derives from the environmentin which it operates. The leadership is excercised both via the CorporativeGovernance and various committees of managementcontrol and coordination forums with SAR participants. Corporate Governance Relationship with stakeholders Shareholder Assembly Internal Committee Operational technical committee Operational commitee Steering committee Technology committee Infrastructure and technology commitee Quality meetings Release committee Administration council 3 counselors 1 president 2 independentcounselors 1 Executivepresident Audit and Information security committee Operational risk committee Contracts for the provision of services and levels of service Management committee Projects committee Personalized attention to users Strategic Committee Procurement committee Ad hoc working groups in the chamber Administration committee Due to the importance of programsand projects, staff is empoweredand is requiredto asume a leadership position. PROCESAR is a leader in several SAR aspects.
