According to a report by the KNF, the Polish financial sector regulator, which analysed the funds' investment activities over the three-year period to the end of the third quarter of 2012, Poland's 14 second-pillar pension funds (OFEs) are becoming increasingly important institutional investors.
According to more recent KNF data, the OFEs cut their share further, to 44.8 per cent by the end of 2012 – and missed out on one of the biggest Polish bond market rallies in recent years. By regional standards, Polish pension fund investment in equities is high. As of 2011, the equity limit, initially set at 40 per cent, has increased by 2.5 percentage points a year. The report highlighted the growing importance of the OFEs as Warsaw Stock Exchange (WSE) investors.
The KNF expressed concerns about the high level of share-price volatility over the period – notably in the second half of 2011 as the eurozone crisis and sovereign indebtedness intensified – and its impact on fund performance and viability.
The regulator has recommended the creation of "safe" sub-funds for members nearing retirement – under the current system the pension companies can only run one aggregated fund – and higher capital requirements for the companies.
Both items are on the government's crowded legislative pension agenda for 2013, alongside a payout system for the first significant tranche of retiring OFE members, and compliance with the European Court of Justice's 2011 ruling obliging the government to increase incrementally the 5 per cent foreign investment limit to 30% by 2021.
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