RUSSIA - ING has signed a deal to sell its non-state Russian pension fund business to rival firm Aviva, and in the process reduced the size of the Russian foreign-owned non-corporate pensions market to just two players.

ING had been the market leader in the tiny three-player non-state pension fund (NSPF) space, having acquired assets under management of £30.4m (€34m) since its arrival in 2002.

Raiffeisen Pension Fund was no.2, followed by Aviva, so this latest deal is set to make Aviva the largest foreign-owned NSPF and give it approximately 10% of the non-captive corporate pensions market.

This is only a small fraction of the €29bn Russian pensions market where the corporate pension fund market is dominant and within that state-owned energy giant Gazprom is purported to hold 55% of the captive corporate pension fund market.

In contrast, the NSPFs account for just 15% of the composite corporate pensions market as between them they have just €48.3m in assets under management.

ING's move follows an announcement last week that it was restructuring the group and reviewing its presence in certain geographical locations, to focus on what it considered to be its core competencies and markets. (See earlier IPE story: ING narrows focus in ‘back to basics' shift)

In a statement, Andrea Moneta, chief executive of Aviva Europe, said the move fitted its long-term ambition of becoming the market leader in the provision of non-state Russian pension fund products, and added it would allow the firm to "cross-sell other life and savings products to a substantial customer base".

Raiffeisen entered the Russian pensions market in 2005 and Aviva Russia followed in 2007, but has since become the sixth-largest life company in the country.

For further background on the Russian pensions market, read IPE's January review:
Russia gets to grip with ailing system)