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Eastern Europe
December 7, 2018 www.intellinews.com I Page 24
Notably, while previously NPFs were clustering around private financial groups, the banking sector clean-up shook the market and shifted the bulk of pension savings to state and quasi-state groups.
Currently about RUB1.4 trillion ($21bn) of pension assets are concentrated around Gazprombank and its parent, the state-owned natural gas giant Gazprom, with the latest acquisition being the NPF Blagosos- toyaniye, with 50% minus one share acquired from Russian Railways. Other Gazprom-affiliated pen- sion assets include Gazfond, SOGAS, and Lider.
Another major player is the Region group of companies, which is affiliated with oil major Rosneft. Region has been consolidating stakes in NPF assets such as Traditsia fund, Soglasiye, and Neftegarant.
Region and Rosneft are also believed to be related to Cyprus-registered Riverstretch Trading & Investments (RT&I), which has been hoovering up NPF Budushee and other assets of Boris Mints’ troubled O1 Group.
Region's fragmented pension assets are estimated at RUB520bn and are reportedly managed by the ex-top manager of Sberbank Galina Morozova. Sberbank, Russia's largest state-controlled bank, is de-facto the market leader, managing RUB618bn of pension assets through its NPF structure that has been expanding organically and made only one acquisition recently of VNIIEF Garant.
The fourth major player with RUB570bn of assets is being formed on the basis of NPF assets of bailed Financial Corporation Otkritie.
Kommersant notes that the remaining 33% of the NPF market also has large players, such
as Safmar and Doverye of Mikhail Gutseriev,
or VTB Pension Fund, but those are reportedly considering consolidation with one of the four major groups, namely with Region and Gazprom, respectively.
Analysts surveyed by the daily confirm that the private pension fund market has become an oligopoly, which is also highlighted by the asset concentration indexes officially released by the Central Bank of Russia (CBR). The regulator has allowed the concentration as it prefers to supervise a small number of large, well known, and predictable players ahead of the pension system reform planned by the government.
In September Finance Minister Anton Siluanov said that the new federal pension savings system – a funded pension system — based on individual pension capital (IPK) could be launched as of 2020. The new system suggests that working Russians manage their pension savings them- selves through non-state pension funds, with the amount of the mandatory payments increasing from 0% to 6% of salaries, 1pp annually.
The IPK-based pension savings system was designed by the finance ministry and the CBR in 2016, when the government scrapped mandatory pension saving payments made by employers to the state pension fund in an effort to ease the pressure on the budget and reduce the deficit.
Another major quasi-state player could be intro- duced together with the pension savings system revamp, as Russia's state development bank Vnesheconombank (VEB) is likely to get a mandate for a pension fund. Until now, pension savings of those Russians that did not indicate any particular fund or programme, so called molchuni or "si- lent" funds, are automatically transferred to VEB which manages the state pension investments.
This gave VEB a RUB1.7 trillion portfolio on which the state development bank earned a return of 8.6% in 2017. This was twice as much as the average 3.8% investment income of NPFs. Should the government qualify VEB as an NPF, it would broaden its investment options, and is seen as
a positive measure for the "silent" pensioners.