New rules for pension funds
The government yesterday cleared the road for social security funds to invest more of their reserves in equities and real estate and also to take on professional fund managers to manage their assets. A joint ministerial decision signed by the economy, labor and health ministers yesterday set out the rules for the new investment framework for social security funds. The new rules allow social security funds to invest up to 23 percent of their assets in real estate and stocks listed on the Athens Stock Exchange at a ratio of 40 to 60 percent respectively. The remaining 77 percent can be invested in government securities, bank bonds and repos without any restrictions. Seeking to limit the risks and at the same time encourage the funds to diversify their portfolio, the new framework caps the funds’ maximum investment in a single stock or mutual fund at 5 percent. In addition, they cannot hold more than 30 percent of their portfolio in a single sector. The funds can own stocks of up to 30 companies. Equities apart, they can also invest in mutual funds and derivatives. Analysts said the new investment structure could release an estimated 15 billion euros from social security funds into the equity market, although the stock market’s current doldrums could discourage a headlong rush at the moment. The government’s decision to allow funds to hire professional fund managers to manage their assets should help them improve returns and boost their reserves. Sofia is now in talks with Germany for a funding package of some 20 million euros and hopes to secure 70 to 75 million euros as a grant under the ISPA program once the design is approved.
