Despite legislative uncertainty, the number of non-state pension funds (NPFs) according to the latest research, grew tenfold between January 1996 and January 1997 with a 30% increase in membership over the period bringing the total to 1,662,000.

There was also a dramatic turnaround in returns from investments, largely as a result of a substantial fall in inflation while assets under management on latest estimates stood at RUR4.6trn ($798m) in March this year.

The statistical analysis forms part of a paper on the future of NPFs prepared by Dr Alexander Kurtin of the Nadezhda Non-state pension fund in Moscow for Callund Consulting and the Know-How fund. In January 1996, a year after the first licenses were granted, there were 26 licensed NPFs while by January 1997 the number of NPFs had increased to 254. Asset management companies, first licenced in October 1995 numbered 142 in January this year.

Total funds under management grew rapidly in 1996 to RUR3.68trn, an in-crease of 80% on the previous year, with unofficial estimates suggesting that the figure had increased another 25% by March this year. Average annual contributions stood at RUR412,000, low in Western terms but at 50% of the statutory minimum wage, significant in Russia.

The net rates of return have also in-creased. 1995 saw a gross return of 99.4% making a loss of 30% when inflation of 130% is considered while 1996 produced a net return of 53% on a gross return of 75% with inflation at a considerably more benign 22% last year.

In terms of membership, five funds now have over 100,000 members whilst at the other end of the spectrum 55% of funds have under 500 members a drop from 61% in 1995. The biggest growth came in funds, with over 10,000 members, which increased from 25 to 39 between 1995 and 1996.

These companies administered a total of 902 schemes, 93% of which were de-fined contribution with 90 NPFs having started to pay out pensions with 157,000bn people receiving RUR146bn last year.

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