SPAIN - Geroa Pentsioak, the €712m defined contribution pension fund set up to complement the Spanish state pension scheme for the employees in Basque Country region of Gipuzkoa, is challenging its regulator for more investment freedom.

Eduardo Garcia Uriarte, head of internal control, explained  following the introduction of a new law last year the fund cannot invest more than 2% in the combined 17,000 companies that make up  its membership.

According to Garcia, the fund therefore now has very reduced investment options should it want to invest in the region.

"One of the aims of Geora is to encourage the local industry," he said.

The fund has taken the regulator to court over the law and expects a verdict early next year, he told IPE.

Almost 90% of Geroa's assets are currently invested in fixed income, up from just over 70% at the end of last year.

The remaining 10% are invested in equity, 3% of which is invested in local industry.

Geroa's returns until the end of September this year so far have been -1,97%, contrasting the 6.7% average return since the fund's inception in 1996.

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