Central Bank says fixed fees for pension administrators will not cover expenses

The fee adopted by parliament for the administration of the fixed part of second pillar pension funds at the level of 0.025 percent does not cover actual expenses, the spokesperson for the Slovak Central Bank (NBS), Jana Kováčová, told the TASR newswire on March 9, adding that this will significantly influence the business conditions of the pension management companies (DSSs).

The fee adopted by parliament for the administration of the fixed part of second pillar pension funds at the level of 0.025 percent does not cover actual expenses, the spokesperson for the Slovak Central Bank (NBS), Jana Kováčová, told the TASR newswire on March 9, adding that this will significantly influence the business conditions of the pension management companies (DSSs).

The change in the level of fees is part of the amendment to legislation on pension savings approved on March 4 by parliament. The Labour, Social Affairs and the Family Ministry, in cooperation with NBS, had submitted a proposal to decrease the fixed part of the fee from its current 0.065 percent to 0.047 percent of the funds administered. But parliament approved the Finance Ministry's proposal of a more significant decrease, namely to 0.025 percent.

“The aim of NBS's proposal, which was not approved, was to change the philosophy, not the conditions of doing business for DSSs,” Kováčová emphasized.

According to the Government’s proposal, the fees to DSSs for the administration of pension savings should consist of two parts - the fixed and the variable – from the beginning of next year. The monthly fixed fee will be decreased from its current 0.065 percent to 0.025 percent of the administered funds; the rest of the fee to the fund administrators will depend on the attained increase in the value of pension savings.

The amendment will also introduce the so-called guarantee account for the pension funds. In specific cases set by law the amount in pension funds will be added to from this account so that at least the principal is guaranteed for participants in the second pillar. Parliament will discuss the Government's proposal as early as the week of March 9 in a fast-track legislative proceeding. TASR

Compiled by Zuzana Vilikovská from press reports
The Slovak Spectator cannot vouch for the accuracy of the information presented in its Flash News postings.

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