The size of payments will then depend on how much has been saved, the pension period and calculated return. Under a defined-benefit pension programme, life insurance companies and pension funds – or those behind them – in a sense offer insurance against a form of absolute risk to which everyone is exposed. Absolute risk may, for example, be a change in economic developments as a result of major disturbances to the world economy or the domestic economy. Under a defined-contribution pension scheme, the individual member assumes the absolute risk. With a larger share of pension savings in defined-contribution schemes, some of the risk that is now being borne by insurance companies will be transferred to members. One problem that may arise in connection with defined-contribution schemes is that members end up with benefit payments that are  BIS Review 48/2002  9  markedly lower than expected. Therefore, it would also be appropriate to apply risk limits to definedcontribution pension schemes. Conclusion The local government sector employs a rising share of workers in our country, accounting for close to 25 per cent of employment today. The behaviour of local government, as a user of labour and employer, is of considerable importance for economic developments and also for the inflation outlook. The local government sector is a major user of financial service, both as borrower and as buyer of insurance products. Norway has a well-developed financial system, but its bond market is small compared with other countries.
Titles of the boxes are shown on the slide. I strongly recommend that you read these boxes, which will be published on our web-site shortly. Now, I would like to convey the main messages of the report. Firstly, I will touch upon the global economy and then move on to the monetary policy. The last quarter of 2012 was marked by an improvement in the risk appetite (Chart 1). Concrete steps taken towards the resolution of the Euro area problems as well as the favorable news regarding the US and Chinese economies were the leading developments that fed into the risk sentiment. On the other hand, quantitative easing policies were sustained amid the persisting sluggish growth outlook in advanced economies. Continued monetary easing at a global scale accompanied by increased risk appetite led to an acceleration in portfolio flows towards emerging economies (Chart 2). We are of the opinion that all these developments once again highlighted the importance of a flexible monetary policy framework. Chart 1. Global Risk Appetite  Chart 2. Portfolio Flows to Emerging Economies (Billion USD)  Source: Credit Suisse, Bloomberg. Source: CBRT. BIS central bankers’ speeches  1  1. Monetary policy and monetary conditions  In this period of extraordinary global circumstances, the policy framework designed by the CBRT plays a great role in confining the adverse impacts of global shocks in Turkey. Particularly the year 2012 was marked by the fruitful implementation of our policy mix.