POLAND- Poland has merged its pensions and insurance regulators to create a “one-stop” financial services supervisor.
On 1 April the pension regulator, UNFE, was formally merged with the insurance regulator, PUNU, to form the Supervisory Commission of Insurance and Pension Funds, KNUiFE.
Finance minister Marek Belka has appointed Jan Monkiewicz to head the new body.
The merger is expected to accelerate the consolidation of the country’s second pillar system, established two years ago. The original model assumed between 6 and 10 funds over the medium to long term. So far, the number of funds has fallen from 21 to 16.
This is widely accepted to be too many. PricewaterhouseCooper's Polish office estimates that the minimum critical mass for pension funds in the current market is approximately 400,000 participants. Only five of 16 funds have achieved that level so far.
“The new regulator is expected to be more market-oriented, allowing funds to merge to reach critical mass and allowing other shareholders to exit the market,” says Jim Kernan, financial sector regulatory consultant and member of the international pensions reform board at PwC in Warsaw. “In the past, UNFE has been reluctant to do so, but that all changes as of today.”
One of the government's main reasons for setting up KNUiFE is to be able to supervise financial groups more effectively, Kernan says. Most of the larger pension funds are subsidiaries of insurance companies - notably the funds operated by CGNU, PZU, Nationale Nederlanden and AIG. Merging the two regulators is expected to lead to efficiencies in group supervision and a better oversight of risks in the financial sector
The merger may also enable the regulator to tackle the issue of product costs, he adds. Pension funds currently charge asset management fees of 0.5 basis points and front-end loads of between 4% and 9%, well above the European average.