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Pension funds transfer €12bn to Hungarian government

15.06.11 IPE

Hungarian pension funds have transferred HUF2.9trn (€11.8bn) back to the public social system as part of the government’s controversial plan to reduce its debt.

The funds were transferred to the Pension Reform and Debt Reduction Fund recently established by the governmental debt management agency AKK.

In January, Hungarians had to choose whether they wanted to stay in the second pillar or return to the state pension system, with more than 95% opting for the latter.

As at 31 March, total assets in the 18 pension funds had amounted to HUF3.2trn, according to figures released by pension fund association Stabilitas.

Of that, HUF1.5trn was invested in government securities, HUF1.1trn in units in investment funds, HUF343bn in shares and HUF78bn in mortgage bonds.

Stabilitas also calculated that, in the first quarter of this year, the average yield on Treasury portfolios in the first quarter was 1.8% for growth portfolios, 2.5% for classic portfolios and 3.1% for balanced portfolios.

Funds are now required to calculate the yields for each member and transfer those to the Pension Reform and Debt Reduction Fund.

The supervisory body PSZAF noted it would be looking into whether the pension funds were abiding by the rules during these procedures.

The regulator has recently criticised pension funds for allegedly breaching certain regulations regarding indirect investments.
Author: Barbara Ottawa