08 September 2003 00:56
Russian fears on pension managers
The Russian government will today recommend to its citizens a list of 55
asset managers - many of whom have little or no experience of managing public
funds - as operators of individual accounts within the state pension fund.
>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 move represents a
significant drop in requirements for asset managers who are able to compete
for Dollars 3bn worth of state pensions and threatens to undermine confidence
in pension reform. It raises the risks for the future pensioners and could
discredit the entire pension reform in Russia.
"The government was obligated by law to establish higher fiduciary
standards and they have failed to do so. Some of the companies that they are
recommending to the Russian population have no public track record. This
discredits the pension reform in the eyes of the population," Elizabeth
Hebert, the head of Pallada asset management, said.
The decision to set low requirements for asset managers - both domestic and
foreign - is seen as a result of fierce lobbying by Russia's powerful
financial groups in the highest echelons of the government.
Mikhail Dmitriev, deputy economics minister and architect of the original
pension 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."
Mr Dmitriev had originally proposed that asset managers have a record of at
least two years of managing public money and have held the licence to operate
in the market for the past five years. But both requirements had been removed
after the draft pension reform plan went to the government for approval.
Under the final plan, asset managers do not have to prove their experience of
managing public funds, but are required only to have had certain volume of
assets by August 1 2003. This allowed many dormant companies to inflate their
balance sheets to qualify for the tender.
>From the 55 approved asset managers, 26 received a licence within the last
year and nine were licensed just before the tender. Some of the new funds
have been set up by oil and gas groups, including Rosneft, a state controlled
oil company.
Mr Dmitriev said Russia's Securities Commission, the regulatory body,
"has persistently called for lowering the requirements".
[FTI [The Financial Times]] |
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