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Pension reform and debt reduction board holds first meeting

The five-member governing board of the Pension Reform and Debt Reduction Fund held its inaugural meeting on May 18, business daily Napi Gazdaság reported, citing the National Economy Ministry as a source.

The governing board ─ the fund's main decision-making body ─ is working on preparing the transfer of the private pension fund assets to the fund, the ministry told the daily.

Hungarian 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. Members who made the move were promised a yield over inflation on their pension savings.

The governing board is headed by Roland Nátrán, National Economy Ministry state secretary in charge of financial policy. The four members of the fund's governing board are appointed by the relevant ministers for general government, for social policy and pensions and for harmonizing government operations. The fifth member is the head of the State Pension Fund.

The transfer of the assets, estimated at almost HUF 2,900 billion or about 10% of GDP, is scheduled for June 12. The private pension funds have until July 20 to claim back from the state fund the real yield, estimated at about HUF 220 billion, to be paid to former members. The exact size and composition will not be known until May 31, 2011, the evaluation day of the portfolio.

The assets in the fund will be used to reduce state debt or to cover current government expenditures. The fund is to pay HUF 528.8 billion into the central budget this year according to the 2011 budget act.

Napi Gazdaság said Unicredit Bank won a tender to act as a custodian for the foreign securities in the fund's portfolio.