Page 136 - IFR Opportunities in Russian capital markets

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ifrintelligence reports/Opportunities in: Russian Capital Markets
Unsurprisingly, the privately-run companies are proving to be far more effective managers of funds than VEB. Analysts also say that younger people coming into the market are a bit more savvy than their parents and are more likely to choose private funds.
VEB's share of fresh money from the Russian Pension Fund was 87.1% in 2006, and only 12.9% was earned revenue, a worse performance from 2005 when the breakdown was 82.4% and 17.6%, respectively.
On the other hand, of private management companies’ fresh money, 67% was from new customers and the remaining 33% was from earned profit, better than in 2005 when the respective breakdown was 71.1% and 28.9%.
The stock markets’ association, the National Association of Stock Market Participants (NAUFOR), estimates that the money private pension funds will have under management will rise from US$10bn in 2005 to US$440bn by 2015, at which time NAUFOR estimates one-third of the eco- nomically active population will use the services of a brokerage company in some form.
The biggest pension funds in Russia are still the funds associated with the biggest companies, and the biggest of them all is Gazfond, which belongs to gas monopoly Gazprom.
In the 1990s, Gazprom's management used their pension fund like a huge slush fund to finance their business activity. But in 2005 it began to revamp its pension fund and stop the abuse.
Likewise, in January 2005 LUKOIL chairman, Vagit Alekperov, ordered a makeover of LUKOIL’s pension fund, Russia’s second biggest, saying he wanted to see his oilmen retire with “an honourable and sufficient” pension at the end of their careers.
Other industrial groups, such as Interros and oil major Surgutneftegaz, have also been shedding the bad habits of in-house pension fund abuse, say analysts, but maybe the most advanced of all is utilities monopoly UES, which boasts one of the best corporate pension schemes of the government-controlled companies.
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