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Private pension funds lose on leaving members

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Hungary's 18 private pension funds closed the first half of the year with operating losses of HUF 5.09 billion, more than double the losses of HUF 2.38 billion for the full year 2010 and an eight-fold increase from losses of HUF 643 million in H1 of last year, figures from the Hungarian Financial Supervisory Authority (PSzÁF) showed.

The sharp higher losses came as revenues fell even more than costs as the sector was reshuffled in the period – legislation passed late 2010 gave members of private pension funds had until the end of January to opt out of a move, along with their retirement savings, back to the state pension pillar.

The fresh figures on the PSzÁF website show 3,011,149 pension fund members returned to the state system, and the funds transferred HUF 2,925.3 billion – the leaving members assets – to the state as required between June 1 and 11.

The move left private pension funds with 100,625 members and cut the combined value of their portfolios to HUF 244.3 billion by the end of June.

Operating revenues of the private pension funds fell to less than 9% of their level in the same period last year, from HUF 8.6 billion to HUF 750 million.

Although operating expenditures also fell considerably, dropping 37% to HUF 5.8 billion, this could not offset the fall in revenues.

Among expenditures, agent-related expenditures fell from HUF 2.2 billion to HUF 30 million, administration and registration fees dropped from HUF 3.2 billion to HUF 2.4 billion, marketing and advertising costs were down from HUF 262 million to HUF 37 million, while other operating costs rose from HUF 1.55 billion to HUF 1.94 billion. Fees paid to the supervisory authority amounted to HUF 240 million, down from HUF 394 million in the same period of 2010.

Profits from investments totaled HUF 97.8 billion in H1, down from HUF 117.2 billion one year earlier.

The market value of the private pension fund portfolio fell to HUF 244.3 billion by the end of June from HUF 3,162.8 billion at the end of March.

Within the end-of-June portfolio, 50.6% of assets, or HUF 123.7 billion, were kept in bonds, with 47.4%, or HUF 115.9 billion, kept in Hungarian government securities, 10.9%, or HUF 26.6 billion, in shares, 31.8%, or HUF 77.751 billion, in investment fund units, 5.2%, or HUF 12.7 billion, in cash and 1.5%, HUF 3.55 billion, in other assets.

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