CHILE - The domestic stock market tumbled by over 3% yesterday as it was announced pension funds' international investment limits may be raised from 30% to 45% as early as July.
President Michelle Bachelet announced the plan in her state of the nation address causing the Chilean stock market's 3.4% fall, the largest since worldwide fluctuations in February.
Bachelet said Chile’s pension fund investment universe needed expansion to ensure a good balance between financial flows to and from the country. This would then ensure Chilean exporters could be more competitive in international markets.
Bachelet also unveiled plans to lower the country’s surplus target, taken from copper sales, to 0.5% of GDP next year, down from the 1 % target installed in 2000.
This target was initially intended to finance the country’s pension scheme and secure future payments of the government's foreign debt and debt owed by the central bank.
By lowering the target, the government would be able to spend more on education and healthcare, the President told the nation.
A number of pension schemes have been prompted to lock in gains with a move into bonds after the estimated deficit across FTSE 100 DB pension schemes improved by £36bn, over the 12 months ending 30 June last year, JLT Employment Benefits found.
HM Treasury has agreed in principle to give NEST a £329m contingent liability guarantee in the event of the master trust's wind up or closure.
AMP Capital has set up a dedicated team to help institutional investors, including pension funds, invest in infrastructure through direct equity allocations.