Despite a smaller increase in the number of fund members compared with the sharp rise of 1998, assets in Hungarian pension funds soared to HUF54bn in the first half of 1999 compared to HUF29bn at the end of 1998.
Fund membership rose from 1.3m to 1.57m employees according to figures at June 30 this year from the state private funds supervisory board.
In the first quarter of 1999 Hungary’s mandatory private pension fund assets increased by HUF14.4bn of which approximately HUF2.1bn (14.6%) came through financial revenue, with the larger portion incorporating membership fees.
However, a striving for safety can be remarked in individual investment strategies with the overall portion of government securities increasing sharply to approximately HUF34.8bn by March 1999 from around HUF22.1bn at end 1998.
Hungarian government bonds now represent over 84% of portfolio holdings in mandatory funds. During the same period equity investment grew from HUF1.9bn to HUF2.8bn accounting for 6.8% of total assets. Cash holdings dropped from almost 11% to 5% of assets.
Mandatory private pension funds in Hungary generally follow a risk-averse investment policy, due in part to the rigorous investment regulations that apply to them. The possibility of joining a mandatory fund ended on August 31 this year so the number of entrants will now only grow with new arrivals in the labour market.
And the operation of mandatory private pension funds is still having a beneficial effect in stimulating growth within the voluntary private pensions sector. In the first quarter of the year employee numbers in voluntary funds increased by 26,000 to 965,381 from 939,291 at end 98.
Assets in these schemes have nearly doubled on 1998’s first quarter value and are now approaching HUF110bn.
Equity investment in these funds also increased marginally from 10.9% to 11%, while government securities stepped up from 73.4% to an approximate four fifths holding in portfolios.
Total revenue for the voluntary funds at the end of the first quarter was around HUF 17.6bn. Assets managed by the whole Hungarian savings sector exceeded HUF151bn from HUF130bn at end 1998.