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Russia set to announce pension asset managers

RUSSIA – The Russian government is shortly expected to announce the list of asset managers that will be eligible to run the money of the occupational pension schemes.

All those domestic fund businesses that are fully compliant will be listed and passed on to the occupational pension funds in the next few days. The companies will then forward the list onto each individual employee by the end of October allowing them to choose which manager they would prefer to manage their fund or whether they would rather the state-owned Vneshekonombank remain responsible.

Money into defined contribution schemes has been increasing by around 200 million dollars a month in Russia and market participants are confident that this growth will continue rapidly, offering a lot of money to Russia’s fund managers.

Confidence in non-state managers, however, may be difficult to build. According to RIA Novosti political analyst Marina Shakina: “Public polls show that only seven percent of Russians are prepared to trust their pension savings to non-state managing companies.”

Says Mattias Westman, director of asset manager Prosperity Capital Management: “There is so much more money up for grabs for the fund managers, although this year it is likely that many people will not choose to tick the boxes and pick a manager as it will take time to understand the process. But the market will certainly grow.”

Prosperity is hoping to apply for a license from the Russian government to be able to manage occupational pension fund money next year.

A subsidiary of Vnestorgbank, ODK, has been selected by the government as sole depository for the pension savings accounts of those who select an asset manager. Those who do not choose an asset manager will have their pensions savings sent to Vneshekonombank for management.

Russia’s pension reform has steadily been taking shape over the past 10 years. President Putin signed the law to allow private asset managers to participate in the management of funded pension assets back in January.

Until now mandatory Russian pension assets have been managed by the Pension Fund of Russia, but the new law allows individuals and employers to choose a savings scheme managed by private asset managers – therefore being able to choose an investment strategy which suits them. The PFR does not invest in equities.

It is estimated that by 2005 Russia could have up to seven billion euros invested in occupational pension funds, and as much as three billion euros in voluntary schemes.

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