GREECE - Alpha Trust Mutual Funds Company has been appointed by the Economic Chamber of Greece pension fund, one of Greece's four occupational pension funds, to look after a balanced managed mandate of behalf of its members.
The fund was recently set up by Greece's chamber of economists to provide its members - who are economists, accountants or anyone with an economics degree gained in Greece - with access to a suitable pensions plan as there is no facility available under existing first pillar pension arrangements.
It has already built up assets of €2.3m, but gains contribution inflows of approximately €300,000 every quarter and subscriptions are expected to keep growing, according to Haris Stamatopoulos, vice chairman of Alpha Trust Investment Services - the pensions consulting division of Alpha Trust.
The mandate is to deliver a balanced managed portfolio comprising fixed income, cash and equities, though assets are likely to be mainly domestic, said Stamatopoulos and will invest no more than 60% of the assets in equities - as is the case with the firm's existing balanced managed mutual fund, he said.
"It is based on our own balanced fund, which is why we won the mandate contest, because this fund is seen as the best performing balanced fund in Greece - rated ‘five star' by Morningstar - over one to 10 years," said Stamatopoulos.
He notes there are very few mandates issued by Greek pension funds - whether first pillar main, first pillar auxilliary or second pillar occupational - in part because many still tend to have their assets managed by the Bank of Greece, and in many cases have been less than well-managed over the years as those heading up the schemes did not have sufficient knowledge to understand the asset allocation required.
At the same time, there has also been very little development of the pension fund arena in Greece, despite legislation introduced in 2002 to implement the IORP directive, as the government has yet to set out any regulatory requirements on the management of funds or tackle the taxation of such assets.
While the government announced intentions to reform the Greek pensions system, Stamatopoulos notes there is still a lot of work to be done to built a professional Greek pensions market.
"We have first pillar funds, and some supplementary funds. But these were so far managed by people appointed by government and unions, so they were not very sophisticated managers. There is a selection process now for at least the CEO of these funds, but [the government] still has a lot of vacuums to fill because these CEOs are not provided with investment committees, auditing processes or proper certificates. They still have to go through a transition period before they become truly professional," said Stamatopoulos.
Those occupational funds which do exist - such as the €23m Post Office pension fund for which Stamatopoulos is also on the investment committee - also tend to use mutual funds because past experience indicates assets moving through the Bank of Greece are perhaps handled by people with less than the minimum requirement of experience, he claims.
"The other issue is very few people from the Bank of Greece - where assets tend to be managed - have invested in stocks so very few pension funds invest through investment funds, and mainly use mutual funds."
He continued: "There is a change on the right track but after moving a lot of money into structured assets and finding there was not proper management of them, the boards of directors of pension funds are very careful and afraid to invest in risky assets, even though they understand investing only in bonds is not in the long-term interests of their members and they need to do something more sophisticated.
"But we still need more work to be done on institutional pensions, such as the linking up of a framework, proper governance, transparency in accounting and fees, and more professional people. People can sometimes make mistakes but they need to present a rationale for doing things by accident," he added.
An in-depth update on the Greek pensions market is provided in the June edition of IPE.