Poland relaxes management rules for auto-enrolment pensions
Poland is likely to relax rules restricting what type of companies can run auto-enrolment pension funds, which are set to be rolled out from the start of next year.
Paweł Borys, head of the Polish Development Fund (PFR), made the announcement in a recent finance ministry press conference. PFR is co-ordinating the financial management and investments of the new funds, known as PPKs.
The PPK plan aims to bring up to 75% of the country’s employed population into occupational pension schemes through auto-enrolment.
So far PPK management has been restricted to investment fund management companies (TFIs) with a minimum three years of operating in the Polish market and at least PLN10bn (€2.3bn) of capital.
The inclusion of pension fund companies (PTEs) would bring additional players into a system that has been designed to avoid market concentration. Currently PTEs manage second-pillar pension funds.
Charges for the auto-enrolment funds are capped at 0.6%, including performance fees. Any manager that has more than 15% market share will not receive fees on the excess assets, according to the government’s draft legislation.
State-backed PFR runs its own TFI, which was set up as the default fund for employers unable to choose a private-sector fund.
While the choice of fund is up to the employer, it has been reported that workers’ representatives, such as unions, are likely to have an input into the final decision.
Regulator approves fund management company takeover
Meanwhile, Poland’s regulator, the KNF, has approved PZU Group’s takeover of the second-pillar and voluntary pension funds run by Pekao Pioneer.
The agreement between the two parent companies, PZU Life and Bank Pekao, was announced last December.
PZU’s Złota Jesień is the third biggest of Poland’s 11 second-pillar funds, known as OFEs. At the end of March it had 2.12m members and net assets of PLN21.3bn, while Pekao had 326,069 members and assets of PLN2.4bn.
The liquidation of Pekao’s voluntary fund and transfer to PZU will take place this year between 19 May and 28 September, while the OFE will transfer between 1 August and 12 October.