LFMI Policy Paper on the Draft Law on Pension Accumulation

The policy paper brings forward LFMI’s conclusions on the draft law regulating pension accumulation. We suggest not introducing the life cycles funds because they would not allow people to choose the risk of pension accumulation suitable to them that does not depend on the age.  Life cycle funds would not encourage people to be interested in financial markets, would not contribute to the formation of investment culture.  Decreasing payoff in pension assets and abolishment of payoffs from pension installments would decrease competition between pension accumulation companies and cause the level of services by private pension funds to drop.

More severe regulation of pension accumulation companies would increase the costs and condition declining interest to carry out pension accumulation activities.  The obligation to orient towards risk and not maximize the accumulated pension asset would have a negative impact on the value of pension assets.  Therefore, we suggest to not discuss these proposals and to consider proposals that would reduce the regulation and administrative burden of pension accumulation companies. A weekly Atgimimas published a commentary about the funds of life cycles by Kaetana Leontjeva.