Estonia mulls raising equity cap to 70%

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  • Estonia mulls raising equity cap to 70%

ESTONIA - The Estonian ministry of finance is looking at drafting new legislation to allow pension funds to increase their equity investments from 50% to 70%, IPE has learnt.

A person familiar with the matter told IPE the Estonian government has been looking at the liberalisation, and it is likely legislation will be drafted this year.

Estonia would follow the move of Lithuania, which recently relaxed the equity cap to above 70%.

Pension fund asset allocation in central and eastern Europe has traditionally been constrained by limits, to take account of the short investment history of the former communist states, to boost local capital markets and to contain risk.

But as the asset value of the funds grow, various CEE countries have woken up to the fact these limits can also impede diversification.

Equity limits in the case of second pillar funds range from 60% in the case of Poland down to 30% in Latvia.

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