Member sentiment ups ING Emeklilik's bond exposure
TURKEY - The €169m ING Emeklilik pension insurance company has increased its exposure to fixed income, prompted by prevailing market sentiment among its customers.
Gökhan Dereli, chief executive of the firm, told IPE: "The current crisis is making our members to prefer more stable investment vehicles, particularly fixed income," said Dereli.
"We recently reduced our exposure to foreign equities and added a long-term fixed income vehicle in the fund. At present, some 80% of all our assets under management are invested in fixed income," he continued.
The Dutch ING Group acquired the firm from the Turkish Armed Forces Pension Fund (Oyak) for €110m in December 2008 and finally changed its name from Oyak Emeklilik to ING Emeklilik last week.
ING's eight pension funds also yielded a total return of 15.12% in 2008 - a figure Dereli believes is impressive in the current market environment.
"We have a conservative approach to managing our members' assets. We are not there to bring a 50% returns with exotic investment vehicles but to make sure our members get a supplementary pension, despite market turbulence, during the savings process," said Dereli.
Turkey introduced new regulations in August 2008 allowing companies' pension foundations and associations with pension commitments to transfer their assets into private pension insurance firms either partially or in their entirety, and requires them to report on their finances regularly.
The move is expected to lead to a notable inflow of new assets into the country's 12 private pension firm, however Dereli does not expect the new regulation to change the local pension landscape over night.
"The new regulation is a big opportunity for us. But foundations still need to be convinced they should transfer their assets to private pension firms. They hesitate because the transfer means notable restructuring. It will take time for the regulation to take root," Dereli said.
"Vesting rights, introduced last spring, are not of much help in the current market environment either. Few ponder about their right to switch funds when unemployment is rising," he added.
That said, ING Emeklilik has ambitious goals for future: to grow its assets and market share by at least one percent point by the end of 2009.
The firm currently has approximately 154,000 members and a market share of 5.6% in terms of assets under management.
The Turkish private pension system, launched in October 2003, currently consists of 12 companies managing assets worth €3.1bn for 1.75m people.
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