RUSSIA – Foreign fund managers have received a green light to break into Russia’s pensions industry as President Putin signs off the law to allow private asset managers to manage funds of mandatory occupational pension schemes.
Russia’s pension reform has steadily been taking shape over the past 10 years, and on January 10 President Putin signed the law that will allow private asset managers to participate in the management of funded pension assets.
Until now mandatory Russian pension assets have been managed by the PFR (Pension Fund of Russia), but the new law will allow 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.
Says Evgeniy Yakushev, a consultant and adviser to the electric power industry’s national pension fund: “This shows that the state has placed trust in private pensions and private asset managers. Now people can choose an approved asset manager which can offer a more beneficial investment strategy.”
Adds Yakushev: “This new law will enable foreign fund managers to enter Russia, and opens the market for private pensions.” Fund managers already taking advantage of the recent reforms are Deutsche Investment Trust, State Street affiliate Pallada and Dutch bank ING.
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.