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IPE special report May 2018

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ING merges Slovak pension units

SLOVAKIA – ING has merged recently acquired pension fund Sympatia-Pohoda dss with its existing pension fund, ING dss.

The funds manage second-pillar mandatory pension accounts for employees of Slovak companies.

ING acquired a 34% stake in Sympatia-Pohoda last year when it bought voluntary pension provider Tatry-Sympatia, Slovakia’s largest third pillar player. It subsequently agreed with the other Sympatia-Pohoda shareholders to merge Sympatia-Pohoda’s pension activities into ING dss in return for 15% of the combined operation.

Slovak mandatory pension funds began operating in January 2005 and are forbidden to publish their membership numbers until next June. However, it is understood that Sympatia-Pohoda adds some 40,000 people to the 80,000 clients ING dss had already acquired.

ING claims that the merged fund will have a 12% market share.

Under Slovak law, those funds that have not signed up 50,000 members by June will be dissolved and their clients redistributed to the other funds.

ING also participated in a further second pillar consolidation exercise late last year, conducting a due diligence when Prvá dochodková sporitel’na (PDS) dss was put on the market by its parent.

ING and Allianz were subsequently invited to enter a second round of bidding but ING opted not to participate and in December Allianz announced that it had closed the deal.

According to Jiri Rusnok, ING director of pensions for the Czech Republic and Slovakia, ING was not prepared to pay the price the PDS dss parent was expecting, but Allianz, which was ranked second in mandatory pensions but first in all other Slovak financial areas, was anxious to add the 50-60,000 PDS dss clients to its existing 270,000-plus.

Rusnok told IPE that he expected further consolidation in the market, and that the now six remaining pension funds would be reduced to four or five.

The sales leave Aegon dss as the smallest fund, with some 55,000 members, which, given customer acquisition costs, does not provide a viable crucial mass, according to Rusnok.

A further round of consolidations may be triggered next month when members will be allowed to change funds without incurring penalty charges. Industry insiders fear that the independent agencies that recruited most fund members on a commission basis may attempt to encourage clients to switch in an attempt to earn further commissions.

Currently, the combined Allianz-Slovenská dss/PDS dss with some 340,000 clients is the largest fund, followed by Winterthur dss with nearly 320,000, VÚB Generali dss with an estimated 176,000, the enlarged ING dss with 120,000 and CSOB dss with around 70,000.

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