OREANDA-NEWS. The Bank of Russia creates conditions for pension savings to work for the economy and make sure their investing is ultimately transparent and understandable. The regulator has developed a draft regulation which sets new requirements to pension savings investments by non-governmental pension funds (NPFs) and management companies (MCs).

In particular, amendments foresee a further reduction of investments into banks. Their maximum share should reduce from 40% to 25% by 1 July 2018. The refusal to use mortgage participation certificates (MPCs) is yet another important step to be made by the year 2019. However, if MPCs have a real estate assessment from a reliable assessor, such documents can be held in a portfolio until their maturity. Instead of mortgage certificates, NPFs will have an option to invest pension savings into real estate by acquiring units of unit investments funds for non-qualified investors. Real estate is a better option for the NPF investment profile and investment funds unlike MPCs have a clearer and more understandable regulation. In addition to MPCs, within the same time span NPFs and MCs will have to get rid of bonds with no credit rating (with the exception of concession bonds).

At the same time, funds and management companies get a possibility to invest into new instruments, thus giving a fresh impetus to market development. They can invest up to 5% of funds into shares of those Russian joint-stock companies listed in CJSC Moscow Exchange Innovations and Investments Market-Prime sector. These are shares of medium and fast-growing hi-tech companies which make their way to IPO. Pension savings might be used to create derivatives and repos provided certain limitations are met.

The document also specifies the list of higher risk securities. Let us remind you that the share of such securities, derivatives and repos in a portfolio has a 10%-limitation. Besides, investments into assets of groups which consist of related entities should not exceed 15% irrespective of the maturity of such assets.

‘These novations are aimed at solving a number of important tasks. They will allow us to increase the profitability of pension savings which is currently ‘eaten up’ by banking mediators. At the same time, the limitation on the share of investments into banks’ assets will promote investments in other instruments including those related to the real sector of economy. Thus, this will promote not only profitability of pension savings but will also attract funds to develop the national economy. The expected changes will also diversify investments of pension savings and reduce risks,’ says Philipp Gabunia, Bank of Russia Director of Collective Investment and Trust Management Department.