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Ministry to limit DSS client transfers

FOLLOWING a meeting with Slovakia's pension fund management companies, the Labour Ministry announced that it will revise the Act on Pension Savings to prevent pension fund depositors from switching fund more often than once every two years, instead of the current one year limit.

If approved by parliament, the change would take effect in August.

The ministry was responding to the growing number of clients who are switching to another pension fund only one year after signing an initial contract, a trend which is worrying pension funds and destabilizing the market.

"We consider two years to be a sufficient period for pension fund deposits to show whether they are increasing in value, and for pension fund managers to demonstrate their ability to manage these funds," Labour Minister Iveta Radičová said.

The ministry also proposes that transfers of clients to new pension funds be carried out directly by the individual funds, rather than through pension mediators, who are financially motivated to close as many new contracts as possible, and are suspected of being behind the recent wave of defections.

As of the end of March, 4.8 percent of depositors who were entitled to had switched pension funds. Minister Radičová had promised fund representatives earlier that she would step in if the rate reached 5 percent, the Hospodárske noviny wrote.

Compiled by Martina Jurinová from press reports
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