EUROPE - A new report has found that pension funds in central and eastern Europe have largely "conservative" investment strategies.
"Generally speaking, pension entities in the CEE region are conservative investors," said a report on pension funds in eight eastern European countries that are set to join the European Union this year.
"The country or origin of the pension entities is more decisive when actual investments are concerned than the pillar of the pension entity," said the 69-page study.
“The general view of pension fund investment in the central and eastern European countries is that risks should be avoided as much as possible, since the pensions of people are not something to gamble with.”
The report sees the “informational asymmetry” between pension fund managers and members as a reason for investment limitations to minimise risks.
The report was compiled by Budapest-based consultancy FI-AD Financial Advisory, the International Network of Pension Regulators and Supervisors, the East-West Management Institute and the Organisation for Economic Cooperation and Development.
The report covers Hungary, Estonia, Latvia, Poland, Slovenia, Slovakia, the Czech Republic and Lithuania.
Poland was found to have the most pension assets of the eight, with 7.74 billion euros in total – almost all of which is in the second pillar. And Poland also had the largest share of pension assets to gross domestic product, with the combined second and third pillar accounting for 4.32% of GDP.
Poland has 11.5 million, or 67.1%, of its 17.1 million-strong workforce in the second pillar, the study found. The third pillar was most developed in the Czech Republic, with 49.95% of employees.
“The purpose of the research was to summarise the regulatory framework of the investment of pension funds in the related countries, the investment styles and strategies of pension funds, as well as the actual investment categories,” the report adds. The research was conducted from May-December 2003.