Making portfolios transparent would increase the level offinancial education and would make contributors less reluctant toinvest their savings elsewhere other than in banks.
Almost three years after the launch of the mandatory privatepensions scheme, the so-called 2nd pillar, had over 470 million RON(110 million euros) in investments in equity and 500 million RON(118 million euros) in investments in corporate bonds. In total,private pension funds have nearly 1 billion euros in assets undermanagement and five million contributors. Each employee is bound tocontribute 2.5% of their gross salary to a voluntary pensionfund.
Pension managers do not, however, publish the detailed structure ofinvestments, so contributors are not informed periodically as towhere their contributions are invested and that they are indirectlyshareholders or creditors of a company listed on the BucharestStock Exchange or abroad, or that they financed the Romanian statewhen the funds bought T-bills.
"When it comes to investments, transparence equals safety. When aninvestment fund publishes its investment structure, investors cansee what the medium and long-term yield prospects are. At present,participants to the private pension schemes can choose theirpension fund based on the yield and the reputation of the fundmanager, and less based on investment structure information. On theother hand, it is understandable why pension managers would declineto reveal the detailed structure of investments because each ofthem wants to retain their edge over competitors," said MihaiChişu, broker at IFB Finwest.
On the other hand, the Romanian capital market complains about thesignificant lack of interest from investors and about the lowamounts being traded, with some funds investing on foreign markets,saying they do not have enough investment alternatives on theRomanian market.
"Pension managers send to the Commission the structure ofinvestment portfolios every month and the Commission has themission to intervene if it notices irregularities with pensionportfolios. Participants can request information about theirportfolio on an individual basis. We don't believe it is necessaryfor portfolio details to be made public because of fears thatinvestment strategies may be copied from one manager to another.But we will take into consideration the suggestion that the annualreport published by private pension managers should contain thedetailed structure of investments," said Mircea Oancea, chairman ofthe Private Pensions Supervisory Commission (CSSPP).
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