1. Developing Annuities Markets: The Experience of Chile Comments: Solange Berstein Superintendent of Pension Fund Administrators - CHILE

2. Importance of the payout phase The payout phase has complexities that must be tackled by any pension reform  Different alternatives for payment  Timing of retirement: annuity risk  Managing longevity risk  Availability of investment alternatives  Competition in provision of retirement products, given its complexity This book is an important contribution to the analysis and policy design Chile has already a significant period of experience: New reform introduced an electronic quotation system

3. 1. Makes quotes through an AFP, Insurance Company or broker Affiliate Participants System 5. Informs the Affiliate Affiliate Make a new quote Select an offer and obtain a pension Request an external offer Desist from pensioning Request a bidding process 6. After receiving offers affiliate may choose between the following options: AFP Life Insurance Companies Insurance brokers 2. Participant sends quote to the system. 3. System sends quotes to suppliers 4. Suppliers send pension offers to the system Suppliers AFP Life Insurance Companies What does SCOMP do?

4. Main Results: more than 88,000 pension requests… September, 2006

5. …And 65% of selected modalities are annuities 51.950 Have selected modalilty

6. We want that people take well informed decisions However, on average, the difference between the best offer and the one chose is less than 2%

7. Percentage of Annuities signed up with and without commission

8. Average Commission by intermediary

9. Percentage difference between the highest and lowest offers in Scomp for an individual By type of pension (September, 2006)

10. What goes next? Better information to affiliates Advisory for affiliates preventing conflicts of interest Promote the auction alternative Development of variable annuities Improvement of life expectancy tables