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Special Report

Impact investing


Hungarians rush to funds

Hungary’s mandatory private pension assets reached a higher than expected level of HUF29bn (e115m) during 1998, their first year of operation, as the number of Hungarians saving for their retirement rose to over 1.3m.
The flow of fund membership fees into the system in January last year, when working Hungarians under 30 could choose between the existing voluntary or new compulsory plans, was followed by the arrival of money in July from new labour market entrants obliged to contribute to the mandatory schemes.
And according to the Hungarian State Private Funds Supervisory Body 35% of the active population, 1.4m people, selected the mandatory funds in what it called a “sign of agreement” with the pension reform.
The introduction of the mandatory schemes also prompted a doubling in the value of voluntary plans, the number of members rising to over 255,000. Subscriptions to voluntary private health funds also leapt fourfold, while private-income replacement funds picked up three times as many members.
Assets for the pension funds sector as a whole climbed to HUF130bn.
As a result of the mandatory scheme introduction though, overall investment activity within Hungarian funds for the year shows an increase in the purchase of government securities and a decrease in stock market dealing - reflecting the rigorous regulations and risk avoiding nature of the new funds.
The investment breakdown for Hungarian funds at the end of 1998 represents 76% in Hungarian government bonds, 2% in corporate bonds, 7% in stocks, 11% in cash and 4% in certificates of deposit.
Overall yield for the fund sector in 1998 came out at 3.26%. Hugh Wheelan

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