The main goal of any pension system isto ensure that members receive an adequate pension incomewhen they retire. Whilst traditional defined benefit (DB)pension plans set out what that pension income will be inadvance and then strive to deliver it, the growing number ofdefined contribution (DC) plans accumulates a sum of assetswhich can then be turned into a pension income onretirement. However, the amount of this retirement income isnot set in advance. In the absence of a proper regulatoryframework, feature n DC plans leads to a focus by not onlypension providers, but also regulators and pension planmembers themselves on the short-term accumulation of pensionassets rather than the longer-term goal of securing anadequate retirement income. The paper is organized asfollows: chapter two discusses the origins of risks basedsupervision and discusses the role of capital in thealignment of incentives in financial institutions. Chapterthree discusses the concept of risk based supervision forpension funds, and its limitations in the case of DC pensionschemes. Chapter four discusses the effectiveness of RBSschemes in DC systems in emerging economies, and the lastsection provides some lessons learned.
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