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Fico set to change pension fund fee structure

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  • Fico set to change pension fund fee structure

SLOVAKIA - Slovakian prime minister Robert Fico has presented parliament with a bill to change the fee structure for pension fund management companies and base it more on positive performance.

Fico wants to slash the current basic fee rate from 0.065% to 0.025% and at the same time introduce a second element to the fee calculation which will vary according to the return achieved by the pension fund company.

In a press conference, the prime minister said this measure would help people to get more money out of their funds in the second pillar, especially those funds whose 2008 performance was described by Fico as “dreadful”.

When asked whether such a slash in fees would endanger the second pillar, Fico said there might be consolidation in the market following such a measure.

Slovakia’s six pension fund companies managed an average return of -3.8% in 2008, according to data collected byADSS, the pension fund association.

The ‘growth portfolios’, which can hold up to 80% in equities but in fact have exposure at present of 20%, lost the most  as assets fell 8.2%.

‘Balanced portfolios’ also lost -6.1% while the “conservative portfolios”, with the highest bond exposure, actually gained 2.8% last year.

In an OECD comparison, Slovakian funds were found to be among the best performing pensions as the nominal pension fund return on an OECD average was close to -20%.

According to ADSS, these relatively low losses for Slovakian pension funds were thanks to “a conservative approach to risk.

If you have any comments you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email julie.henderson@ipe.com

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