Non-governmental pension funds on course for further consolidation

The second quarter of 2017 saw a further consolidation in the non-governmental pension fund (NPF) segment, coming as a result of a merger of four funds (with the largest absorbing the smaller entities). The total number of NPFs declined to 69, the Review of Key Indicators of Non-governmental Pension Funds  shows.

Between late June 2016 through late June 2017, three funds acquired eight NPFs in mergers. These transactions involved at least one fund in the top ten.

With small players exiting the market, the consolidation in the NPF sector has led to higher concentrations of assets under their management. In mandatory pension insurance (MPI), funds from the top ten manage up to 92.6% of all pension savings, which come from 93.4% of NPF insurance policy holders. One year ago, the two readings were under 82% each.

Funds in the top ten by the volume of pension savings ramped up their shares, both in terms of the volume of own assets and the number of voluntary insurance scheme participants. In terms of the amount of pension savings, their share was virtually unchanged (87.4% as of late 2017 Q2).

Steadily high yields have been posted by NPFs focusing exclusively on MPI. Their weighted average yield in 2017 H1 and the same period last year was above the market average.

By the end of the second quarter, aggregate pension savings in NPFs and the Pension Fund of Russia grew almost 2.4% to 5.4 trillion rubles. The savings to GDP ratio in the prior twelve months remained unchanged at 6.1%.