POLAND - Officials are hoping fewer Poles will opt to leave these funds now the legal transition period for merged pension funds Aegon and Skarbiec Emerytura has ended.
Every time Polish pension funds merge, members get a two-month transition period - from the date of the publication of the government's approval - in which they can transfer to other funds without having to pay a penalty fee.
The period in which members of the Aegon and Skarbiec Emerytura pension fund, which received the official okay for its merger in May (published beginning of June), has now ended. (See earlier IPE article: Aegon gets green light for Polish merger)
"We expect this to strongly influence the transfer session currently taking place," Jaroslaw Kubiak, chief executive of Aegon Pension Fund in Poland, explained to IPE.
Polish pension fund members have the opportunity to change to other providers during a period of several months each year.
The merger of Aegon and Skarbiec "turned into a perfect opportunity for competitors' sales forces since fund clients tend to be confused about what could result from such a process," Kubiak pointed out.
He claimed the market is largely dominated by the "power of the sales forces which can use any kind of argument to win the client, without considering any improvement in Aegon's pension fund performance".
Aegon just beat the market with an average return of -7,6% compared to the average of -7,8% for the first seven months of this year, and place the firm in the middle ground as eighth among the 15 funds.
However, looking at the decline in assets over that same period, Aegon lost the biggest market share and was down -7.8% compared to an average of -2.6%. (See earlier IPE article: Polish pension funds down 2.6% in H1)
"It is true that Aegon assets went down by 7.8% in the first half of 2008, however not because of bad performance but as a result of extensive sales activity of its market competitors in the first half of 2008," Kubiak argued.
The system is considered to have a positive side even though it is cost-intensive for the client and very competitive in the way clients are acquired, according to Kubiak.
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