No mergers or acquisitions can be sealed between mandatory pension companies or funds ahead of March 2008, when the pensions commission (CSSPP) will bring the specific secondary legislation under public discussion.
CSSPP will bring mergers and acquisitions between mandatory private pension firms or funds (pillar II) under public discussion within the first two months of 2008, Mircea Oancea, CSSPP chairman told ZF.
"At present, we have the norm on mergers and acquisitions under discussion and internal analysis. We will bring this norm under public discussion in the first 2 months of next year," the CSSPP chairman specified.
He added there were still many issues that needed to be clarified, with one of the most important ones being whether the merger between 2 pension managers will implicitly mean the merger of the two funds.
If the answer is yes, contributors should be offered the opportunity of moving to another fund without having to pay any transfer penalties and not be forced to automatically become contributors to the new fund. In the reverse situation, where two managers merge, but the funds do not, the pension firm will manage two funds, which is against the law.
However, all these problems will find their legislative solutions in the coming period, believes Oancea. At any rate, possible merger calls between companies or funds will have to wait until this norm comes into effect because the Commission Committee cannot approve any such deal without the respective norm, Oancea also explains.
Mergers and acquisitions have dramatically reduced the number of pillar II pension funds in the region, in line with ruling authorities' data. In Hungary, which introduced pillar II in 1998, there were 38 mandatory pension funds that ran in the initial race, whilst only 30 remained on the market the following year, in 1999. Mergers further reduced the number of funds - there were only 18 operational funds in 2003. However, over the past two years 2 new funds emerged, which took the total number to 20.
In Croatia, where reform occurred in 2002, the number of funds dropped only after the first year.
In Poland, which introduced mandatory private pensions in 1999, the number of initial funds (21) remained unchanged in the first year and dropped to 15 in 2004. Since then, the number has remained the same.
However Bulgaria has proved to be an exception - the number of funds remained constant (8), until this year when a new fund appeared.
It remains to be seen what will happen in the case of Romania.
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