ROMANIA - MKB Romexterra has quit the newly-created Romanian occupational pension sector because there are too few participants in its fund.
The bank, a subsidiary of the Hungarian MKB Bank which is part of the Bayern LB group, had filed a request with the pension supervisor CSSPP for withdrawal of its licence which has now been granted.
After the start of the second pillar this year and the random allocation of people who had not made an active choice on which fund to join MKB only had 1,884 members in its pension fund.
Already four small pension companies have withdrawn from the newly created occupational pension market in Romania and several other will follow, is convinced.
In total over four million Romanians have chosen one of 18 pension funds but when all workers and employees had made their decision seven funds had together less than 50,000 participants.
The number of active pension providers is already down to 14 but BCR, member of the Austrian Erste Bank group, expects it to go down to 11 because of high fixed costs.
In a presentation on Romania in Vienna yesterday evening Nicolae Albu, investment head at BCR asset management, pointed out there was a "high market concentration" with the top three players ING, Allianz and Generali controlling 68.2% of the market and "only six companies hold market shars above 6%".
Among the smaller players are Zepter pension fund (1,649 members), AG2R pension fund (1,127) and Marfin pension fund (194).
But consolidation will not be the only change the second pillar will see, Albu pointed out.
"There will have to be a decision on whether or not pension companies will be allowed to outsource the management of their assets," he told IPE.
Especially ING is pushing for a change to the regulation in order to include is Romanian operations under the company's asset management umbrella.
But BCR would also be in favour of such a regulation.
"It is about economies of scale which in turn is good for clients' assets and reduces costs," Albu said.
But the BCR manager explained the regulator was afraid to give up control over pension companies.
Allianz-Tiriac sees problems with the new pension system more with the participants themselves.
"The Romanian society is still a consumer-oriented society and less focussed on saving and financial planning in the long term," a spokeswoman for the company said.
"People do not understand the advantages of participating in each pillar and even less that they should contribute to both in order to have a comfortable income in retirement."
So far only 87,954 people have signed up for a voluntary supplementary pension in the third pillar.
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