Are you sure?

State could auction shares in pension fund assets

The state could auction shares that are part of assets brought to the state pension pillar by former mandatory private pension fund members, deputy head of the Government Debt Management Agency (AKK) Laszló András Borbély sad in an interview with business news broadcaster Gazdasági Rádió on Tuesday.

Many think the shares will be sold in small parts on the stock exchange, but a strategy for the sale has not yet been adopted, Borbély said. A better solution appears to be selling the shares in big packages at auction to investment service providers or big banks, thus preventing any undue influence on markets, he added.

The buyers would have to be in a position to agree not to sell the shares for one or two years, he said.

Some of the assets, mostly the shares, could be offered to small investors, he added.

The value of the shares was about HUF 300 billion at the end of September. The Hungarian shares in the portfolio were worth HUF 100 billion and the rest were foreign shares.

Mandatory private pension fund members are expected to bring about HUF 3,000 billion of assets to the state pension pillar this year under a government initiative that eliminates one of the country's three pension system pillars. About 45% of the assets are government securities, which will be withdrawn. Investment fund units make up about HUF 850 billion of the HUF 1,500 billion-1,600 billion in remaining securities.

The 2011 Budget Act allocates HUF 530 billion from the transferred assets for the state pension fund deficit. Until the amount is raised, by the end of the year, AKK will finance the difference with sale of discount treasury bills, Borbély said. (MTI Econews)