Fears over Russian pension fund reform
By Arkady Ostrovsky
From next year,
Russian citizens will be able to opt for a private manager to run their
pension account instead of the state. But the decision involves a
significant drop in requirements for fund managers to be able to compete
for $3bn (€2.7bn) of state pensions and threatens to undermine
confidence in pension reform.
head of Pallada Investment Management, warned: "The government was
obligated by law to establish higher fiduciary standards and they have
failed to do so. Some of the companies which they are recommending to the
Russian population have no public track record at all. This discredits the
pension reform in the eyes of the population."
The decision to set
lower entry requirements for fund managers is seen to result from fierce
lobbying by Russia's powerful financial groups.
the deputy economics minister and the architect of the original reform
plan, said: "The final decision to lower the basic requirements for
pension funds has been made by the office of the prime minister and not
based on the documents introduced by the economics ministry."
Under Mr Dmitriev's
original proposal, fund managers should have had a track record of at
least two years of managing public money and have held a licence to
operate in the market for five years. Both requirements had been removed
after the draft pension reform plan was passed to the government for
the final plan, fund managers do not have to prove experience of managing
public funds, but simply required to have had a certain volume of assets
by August 1 2003. That has allowed some companies to inflate their balance
sheets to qualify. From the 55 approved fund managers, 26 received a
licence within the last year and nine were licensed just before the