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From the European Union through the Region to Hungary

From the European Union through the Region to Hungary. Mihály Erdős Strategy Policy Director CEIOPS OPC Chair Erdos.Mihaly@pszaf.hu Tel.: +36/1-489-9610. The Framework. EU Regulatory and Supervisory Framework Pension Market in the CEE Region Hungarian Fund Development.

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From the European Union through the Region to Hungary

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  1. From the European Union through the Regionto Hungary Mihály Erdős Strategy Policy Director CEIOPS OPC Chair Erdos.Mihaly@pszaf.hu Tel.: +36/1-489-9610

  2. The Framework • EU Regulatory and Supervisory Framework • Pension Market in the CEE Region • Hungarian Fund Development

  3. Regulatory and Supervisory Framework • Lamfalussy approach • clear responsibilities • cooperation • supervisors: Level 3

  4. CEIOPS and the OPC • enhance the smooth implementationof the IORP Directive • focus on cross-border issues

  5. I. pillar: state, PAYG II. pillar: occupational plans III. pillar: personal plans I. pillar: new 1408 Regulation II. pillar: IORP and Portability Directive III. pillar: financial services directives But: PL, EE, HU The EU Pension Regulation

  6. Different Approaches

  7. EU Pension Fund Markets Source: OECD

  8. World’s Largest Funds(2002, USDbn) Source: OECD

  9. „Cross-border” Funds in the EU Source: IPE

  10. A „Simplified” Model for Pan-European Funds IORP Asset M. Admin. IORP Directive IT ALM Pension scheme Pension scheme Relevant S&L law Employer & employees Employer & employees Source: EU IMS DG

  11. PersonalRemarks • implementation : the majority by June • pan-European funds: a pioneer needed • not classical solutions: asset pooling (IRL, LU) • decline of traditional DB’s: funding • increasing life expectancy, market valuation of liabilities • poor equity markets, decline in interest rates • labour market requirements • responses (OECD – NAPF) • raising employer contribution • closing DB, opening DC for new employees

  12. The Regional Market Source: IPE

  13. The Regional Market Source: IPE

  14. The Regional Market Source: IPE

  15. The Hungarian Market • concentrated market • similar to other financial markets

  16. The Hungarian Market - Membership

  17. The Hungarian Market - Assets

  18. Asset Management • conservative investment policy • driven by members • disclosure requirements • lack of proper investment tools • introduction of lifestyle investment • more stocks and foreign investment • pension reform does not solve the problems of domestic capital market

  19. Development of Voluntary Funds • driving force: employer • generous tax treatment • absolute or relative • selling: based on employer • mandatory - members

  20. Costs and Limits(2005)

  21. Instead of Conclusions • mandatory: escape from the state – no marketing • market done from the beginning • no cross-sellingdata use • cost effective in comparison with others • IT problems – collection system • two pillars together

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