Generational funds in the Dominican Republic: deciphering the how, not the what

What it is about

Alerso Pimentel, CEO of Quantech, presented at the Fourth Annual Risk Conference (September 18, 2026) what needs to be built for generational funds to work in the Dominican pension system, once the regulation defines the what.

The 22 slides explain what a generational fund is and why risk falls with age, compare the models of Mexico and Chile and place the Dominican Republic, and describe the change of model for a pension fund manager: deciding, controlling, operating and operating in the market. They walk through the six links of the chain (investable universe, market assumptions, benchmarks, glide path optimization, relative risk control and multi-series operation), the constraints of the local market, convergence through flows and an agenda of market conditions and capabilities for each manager.

Objectives

• Explain the scheme of one fund per generation and its logic of risk falling with age.
• Describe the six-link chain that a pension fund manager must build and what the current model did not require.
• Identify the constraints of the Dominican market and a work agenda to reach the glide path.

Key takeaways

1. The glide path is not drawn: it is derived from how much the member still has to contribute; future contributions are a stable asset that lets the young take risk and that runs out near retirement.
2. With ten cohorts by year of birth, the illustration starts at 50% equities, 40% alternatives and 10% fixed income for the youngest and reaches 96% fixed income at consolidation.
3. The scheme needs six links and the current model only needed one; market assumptions and a single covariance matrix are needed to design, control and execute.
4. Without market benchmarks there is no tracking error, and without tracking error there is no supervisable generational fund; control moves from absolute risk to risk relative to a glide path that advances every quarter.
5. Convergence to the glide path is a flow plan, not a sell order: first maturities and contributions, then internal transfers, the primary market and, as a last resort, a measured secondary market.