Greek pension funds will be able to invest up to 23 percent of their assets in the entire eurozone for the first time, according to a draft law, the labor minister said yesterday. Under new legislation being drafted after a bond scandal that has rocked Greece for months, funds will be allowed to invest a further 2 percent of their assets in derivatives such as structured Greek bonds, Labor Minister Vassilis Magginas said. «We are creating a regulatory framework that is much more tight, much more systematic,» Magginas told Reuters in an interview. Accusations by ministers and the press that a civil servants’ pension fund paid too much for a Greek government structured bond have prompted a prosecutor’s investigation and a revision of regulations on how funds invest their money. The Labor Ministry oversees about 80 main funds which manage an asset pool of about -30 billion and are allowed to invest up to 23 percent of their assets in Greek stocks, equity derivatives, real estate and mutual funds. Under the new law, this will include investments in such products in other eurozone countries as well. On top of this, they will be allowed to invest an additional small percentage in Greek structured bonds. «The 23 percent limit stays. The law foresees 2 percent concerning structured bonds,» said Magginas, who took over on April 30. New regulations The conservative government, which has seen its popularity ratings fall slightly as a result of the bond scandal, is expected to submit the draft bill to Parliament within the next 10 days and it may become law within the year. Ministry officials said funds will have up to five years to adjust their portfolios to the new rules, as many were already well over the 23 percent limit in higher risk investments, sometimes going over 40 percent. The rest of their assets can be invested in classic, coupon-bearing bonds or repos, while 1 percent can be invested in time deposits with commercial banks, the officials said. The law creates two new committees – one to advise funds on investment decisions and another on compliance – they added. It also allows funds to set up their own investment management companies to pool their assets and resources better. Greek prosecutors are investigating whether the civil servants’ auxiliary pension fund (TEADY) paid too much for a bond in an affair that has so far prompted the suspension of two Greek brokerage houses. The -280 million, 12-year bond with an initial coupon of 6.25 percent in February, was underwritten by JP Morgan, which has offered to buy it back from the pension funds.