NPFs to offer additional services to their clients
Non-governmental pension funds (NPFs) have been permitted to combine their core activity with rendering financial market consulting services and act as agents for various companies. The relevant law has been adopted by the Federation Council.
Now, NPFs are focused solely on non-governmental pension schemes (NPS) and mandatory pension insurance (MPI). This closed model makes them considerably less competitive in the savings and deposit market.
The new opportunities will enable NPFs to become a ‘one-stop-shop’ for their clients and offer them various social services (insurance, medical and nursing services, recreational facility services, etc.) in addition to pension-related services.
Notably, such non-core activities are permitted only if the annual fee for them does not exceed 50% of the average total NPS and MPI fees for the previous three years. In addition, NPFs will not be entitled to accept client payments for services rendered by providers and will not be liable for their improper execution. These restrictions are supposed to protect NPFs from extra risks and ensure their financial soundness.
The above mentioned law is the first step towards the implementation of initiatives specified in the Bank of Russia’s consultation paper Combining Activity Types in the Financial Market. The law will come into effect ten days after its official publication.