Polish Pension Funds May Soon Invest More Abroad

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Polish Pension Funds May Soon Invest More Abroad

Forbes

March 10, 2004

Poland's $12 billion pension fund industry may soon be able to invest more abroad if a recent ruling by the European Union's statistical office is upheld, central bank Governor Leszek Balcerowicz said on Wednesday.

Eurostat ruled earlier this month that hybrid pension schemes were part of the private sector and could not be counted in public finance calculations.

Poland classifies its privately-operated and owned yet mandatory pension funds as part of state finances, which enables the government to keep a ceiling on foreign investment limits.

"Pension funds may soon have the ability to diversify their assets internationally," Balcerowicz said in a speech to Poland's banking association.

"If Eurostat's decision is maintained, they (funds) will be able to quickly increase their foreign investment to 20 percent (of total assets in line with EU rules) from five percent."

The EU, which Poland is set to join on May 1, is to make a final decision on how it classifies individual countries' pension schemes by September. Poland has signaled that Eurostat's ruling may not apply to its social security system.

Opening up foreign investment opportunities for the funds, which have been captive buyers of Polish bonds and stocks, would hit valuations on local financial markets, say analysts.