CSSPP: Outsourcing asset management, only keeping the responsibility in the pension company
The debate on the potential outsourcing of asset management by the mandatory private pension companies (pillar II) to entities specialized in asset management has changed focus this week, when the representatives of the Supervisory Commission (CSSPP) met face to face with the representatives of the pension industry at the Private Pension Day, organized at FIAR 2008.
Doru FRUNZULICA, CSSPP Board Member, indicated that the market’s supervisory authority might allow the outsourcing of money management only if the pension company retains the official and legal responsibility for the results of the asset management conducted by a specialized company. His statements came after the moment when, almost two months ago, Mircea OANCEA, president of CSSPP, firmly rejected the idea of pension companies outsourcing asset management.
OANCEA said that the management of their clients’ money is in fact the primary activity of the pension companies and CSSPP will not allow them to cede/outsource their main object of activity. However, following pressure from the industry, CSSPP seems to be willing to reconsider this issue.
Actually, the law does not explicitly ban or allow the outsourcing of asset management by the pension funds, said Radu VASILESCU, CEO of ING Pension Fund, the market leader for mandatory pensions. ING plans to be the first company to take a step in this direction of outsourcing asset management to the asset management company of the ING group.
But in theory, no pension company could do this without the agreement of CSSPP. Crinu ANDANUT, CEO of ALLIANZ-TIRIAC Private Pensions, the market’s second largest player, supports the asset management outsourcing idea, but says that his company has no plan similar to the one of leader ING for the time being. According to the data after the first collection of contributions to pillar II, the first two players, ING and ALLIANZ-TIRIAC, shall manage together about 62% of the system’s assets.
Half of the 14 mandatory private pensions companies on the market belong to financial groups that also have asset management companies on the local market. If pension companies were allowed explicitly such an outsourcing, their activity would consist only of administering the personal accounts, information activities, client service and other similar activities.
The international speakers from the Private Pension Day at FIAR 2008 underlined that asset management outsourcing is not only allowed for the pension companies, but it is also recommended in many countries with tradition and experience in private pensions.
