2024-06-14 23:59:23
Proponents of the obligatory cumulative pension system commonly declare that the funds are managed by respected overseas managers, which is a assure for efficient administration of funds. Let me remind you that two corporations have been working in Armenia since 2014: French and German, that are subsidiaries of huge monetary companies.
Lately, the yield of pension belongings has been considerably lowering in developed and creating international locations. in some international locations, returns even strategy zero after accounting for fund managers’ service charges.
Appreciating the worldwide fame of worldwide organizations that handle funds in Armenia, it must be reminded that fund administration shouldn’t be free. they don’t do charity.
Furthermore, this technique is extra pricey to handle than the state system. Fund managers cost comparatively excessive charges for his or her companies.
Within the case of Armenia, the bonus for that service can attain 1.5 % (Half 2 of Article 47 of the Legislation on Cumulative Pensions). In different phrases, fund managers can take as much as 1.5 % of individuals’s collected funds for his or her companies, and their quantity is set by the RA Central Financial institution.
In keeping with Article 40, Half 1, Paragraph 2 of the identical legislation, “… the supervisor of the pension fund can, on the expense of the belongings of the obligatory pension fund, additionally pay the bills associated to the administration of the given obligatory pension fund and the audit of the pension fund, the composition and most quantity of which is decided by The Central Financial institution in coordination with the state approved physique of the monetary sector of the Authorities of the Republic of Armenia. That’s, no matter whether or not the belongings present a return or not, fund managers can obtain bonuses and reimbursements for administration bills.
In keeping with the report of the Amudi Analytical Middle, managed pension funds have offered a cumulative return of 72-76% since inception (2014) up to now (as of 30.06.2022), which is equal to a mean annual return of 6.8-7.0% since inception, relying on the fund. from the sort. For comparability, it must be famous that every of the abnormal residents, having no monetary information, can get the next return by simply depositing (10-12%) than the fund managers offered.
For instance, in 2022 In keeping with the outcomes of the primary half of the yr, the next indicators of the funds’ profitability had been recorded:
1. -5.1% secure revenue fund (AMFIX)
2. -9.3% conservative fund (AMCON)
3:-10.4% balanced fund (AMBAL).
In different phrases, throughout this yr, the fund supervisor not solely didn’t present revenue, but in addition misplaced the funds of abnormal residents (recorded a loss).
Central bankers, fund managers and representatives of economic banking system pursuits who declare that it is a momentary and cyclical phenomenon ought to lastly perceive that this is able to be regular and comprehensible if folks voluntarily and consciously handed over their cash to personal funding corporations. however when all that is accomplished underneath the compulsion of the state, due to this fact, the accountability of the funding threat must be borne by the state once more, which, sadly, shouldn’t be the case. An individual’s future well-being can not rely on inventory market fluctuations. On the similar time, not offering revenue, the managers of the fund take from the cash of the residents the remuneration for his or her companies and compensation for different bills. That is unacceptable. that is merely a legalized “robbing” of state and citizen funds.
It must be reminded as soon as once more that the inventory market in Armenia has not developed since 2014, fund managers don’t have a large selection of investing in Armenia. Specifically, as of Might 2022, fund managers have invested 35 % of the 503 billion dram funds in authorities bonds, and about 22 % have been deposited in banks. Within the occasion that the supporters of this technique unanimously introduced that we are going to quickly have a developed inventory market.
It’s noteworthy that on the time of the introduction of the system, it was determined that 70 % of the collected funds can be invested in Armenia, and the remaining 30 % might be invested in overseas foreign money belongings, whereas within the case of the present laws, the ratio modified to 60:40, that’s, extra money may be withdrawn from Armenia. This was predictable, as a result of the fund managers have very restricted choices to speculate the financial savings funds in Armenia. As well as, they’re a part of the insurance policies of main European funding corporations.
It also needs to be famous that the fund administration market in Armenia shouldn’t be a aggressive market. it is a basic duopoly (two managers) the place fund managers don’t compete by charging low charges or offering excessive returns. The state doesn’t encourage the emergence of latest pension asset managers, neither native nor worldwide.
Due to this fact, within the absence of competitors and ensures, it’s unlikely that we are able to have an environment friendly non-public pension system.
Հեղինակ՝ Economist Suren Parsyan, head of the financial analysis workplace of the ARF Bureau
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