Pension Funds Impact On Capital Markets

Pension system reform has begun since the1980s， pension system of mostcountries in the world are transforming from the PAYG pension system to a fundedendowment insurance system， Chile’s successful Pension system reform has set upan example for many countries. Currently， the most popular multi-pillar pensionsystem in most countries is mixed pension system by PAYG pension system and afunded endowment insurance system. Pension funds have established a relationshipwith capital market since long before in a way which pension funds invest in capitalmarket to maintain or increase its value. Generally pension funds under the PAYGsystem do not invest in capital market， but pension funds under the fundedendowment insurance system will invest in capital market.It is pension funds’ social attributes that make it different from commoninstitutional investors， this paper studies how do pension funds under the fundedendowment insurance system invest in capital markets， and how this investmentexert an impact on capital market.