1. Pension Funds and Infrastructure Development USAID Pension Reform Project Bulgaria

2. Latin America: Multipillar Pension System

3. Multipillar Pension Systems Pay as you go Mandatory Private Pension Funds Voluntary Private Pension Individual accounts

4. AFFILIATES/ ADMINISTERED FUNDS COUNTRYAFFILIATESADMINISTERED FUNDS (US$ Millions) Argentina8.395.36820.381,47 Chile6.279.87635.886,32 Colombia3.954.0073.584,42 Costa Rica832.976299,09 El Salvador847.805482,23 Mexico17.844.95617.012,01 Peru2.471.5932.751,73 Uruguay577.729811,02 TOTAL41.204.31081.208,29 Brazil*5.119.95671.891,18 Data: ABRAPP 11/30/00 ANAPP 06/30/00

5. Regulations for Pension Fund Investments OBJECTIVE: That pension funds be invested in instruments capable of providing an adequate PROFITABILITY AND SECURITY to social security resources. Must provide an adequate legal and tax framework. Social security savings must not pay taxes. Must provide long-term flexibility. Must provide development incentives to securities’ market. Must allow domestic and international investments. Must only establish maximum investment limits.

6. Latin America: Annual Need of Investment in Infrastructure

7. Growth of Pension Assets in Chile (1999-2010) ASSUMPTIONS: Investment return 6% real, 2% annual increase contributions, real annual increase in salaries 2%, amounts in dollars at the exchange rate of March 31, 2000. Source: FIAP, August 2000

8. Chile: Pension Funds and Infrastructure - ELECTRIC SECTOR » Equities US$ 2.340 millions » Bonds US$ 575 millions Companies: Enersis, Gener, Colbun, Chilquinta, etc. (21) - TELECOMUNICATIONS » Equities US$ 998 millions » Bonds US$ 298 millions » Companies: CTC, ENTEL, CONATEL, TELCOY (4) TOTAL: 4,211 million dollars14% of the Pension Fund SOURCE: FIAP, December 1998

9. - HOUSING AND REAL ESTATE DEVELOPMENT » Mortgage bonds $5.250 bln. » Investment funds $500 bln. (real estate) - INVESTMENT FUNDS $235 (Airport) - INFRASTRUCTURE BONDS $2,178 (High ways) - INFRASTRUCTURE BONDS $995 (Secondary roads) - WATER SUPPLY Privatized companies » Equities $1.823 bln. SOURCE: FIAP, December 1998

10. Conclusions and Challenges  There is a great need to develop infrastructure in developing countries.  Pension Funds may constitute a source of financing infrastructure.  There is a need to develop the legal framework to allow pension funds to invest in infrastructure.  There is a need to create new financial instruments to channel pension assets in infrastructure.