At the end of 2020, the net asset value of open-end pension funds was nearly PLN 149 billion, down 4% versus the end of 2019. The decline of assets was significantly affected by the environment of the COVID-19 pandemic. For the most part of 2020, high volatility of prices on stock markets was observed. Growth was restored only in the last two months of 2020, which allowed open-end pension funds to offset most of their first quarter losses.
PTE PZU’s activity
The PZU Złota Jesień Open-End Pension Fund, which is managed by Powszechne Towarzystwo Emerytalne PZU, is one of the largest players on the pension fund market in Poland. At the end of 2020, OFE PZU was the third largest pension fund, both in terms of the number of members, as well as in terms of net asset value:
Source: KNF, monthly data on the OFE market, Data for December 2020
At yearend 2020, the PZU Voluntary Pension Fund (DFE PZU) ran 33.2 thousand individual pension security accounts (IKZEs) in which assets worth more than PLN 343 million were accumulated. It kept the leading position in the voluntary pension fund segment.
In spite of the challenges posed by the year 2020, the voluntary pension fund market increased the value of its assets. The active reallocation of portfolios into equity assets was allowed by the much smaller asset values of these funds compared to open-end pension funds.
Also, the value of DFE PZU’s assets is strongly affected by current contributions, which in 2020 were higher than the year before.
Factors, including threats and risks, which may affect the pension funds’ operations in 2021
On 12 March 2020, the Sejm of the Republic of Poland received a government bill on amendment of certain acts in connection with the transfer of funds from open pension funds to individual retirement accounts. The act is to enter into force on 1 June 2021, and the transformation of OFE into specialized open-end investment funds will take place on 28 January, 2022.
Assumptions for the project of redesigning the operating model of OFEs:
The basis for the operation of the transformed open-end pension funds will be the amended Act on Individual Retirement Security Accounts and Individual Retirement Accounts and the Act on Mutual Funds and Management of Alternative Investment Funds. The bill provides for amendments to several dozen statutes directly related to the operation of open-end pension funds and the social insurance system.
No transition period has been envisaged for adapting the activity of the transformed open-end pension funds to the provisions on mutual fund management companies. From the day of transformation into a mutual fund management company, the universal pension fund management company will be required to apply the provisions of the Act on Mutual Funds and the implementing regulations to this Act as well as the provisions of Community law pertaining to collective investment institutions and managers. Such provisions include in particular the Commission Delegated Regulation (EU) No 231/2013 of 19 December 2012 supplementing Directive 2011/61/EU of the European Parliament and of the Council with regard to exemptions, general operating conditions, depositories, leverage, transparency and supervision.