Loading ...The Private Pensions System Supervisory Commission (CSSPP) on October 2 released for public debate the normative on investments of privately managed pension funds and the organization of investment activities, CSSPP informs. The new draft normative details the enforcement of the law on investments by privately managed pension funds (operating under Pillar II).
According to the draft act, fund trustees are required to ensure the diversification of the pension fund’s portfolio with a view to dispersing the risk and maintaining a high degree of liquidity.
The trustee of a privately managed pension fund is not allowed to outsource asset management and investment activities, in the sense of transferring responsibilities under contract or entrusting the fulfillment of particular tasks to another trustee or trading company.
The trustee of a privately managed pension fund is not allowed to outsource asset management and investment activities, in the sense of transferring responsibilities under contract or entrusting the fulfillment of particular tasks to another trustee or trading company.
With a view to protecting investments, the draft normative instates the regulation according to which the trustee shall set a risk management system in place, allowing the monitoring and quantification at any time of the risk associated to the positions and the influence thereof on the portfolio’s overall risk profile.
This system brings about new obligations regarding risk management, such as the implementation of strategies, policies, procedures for risk administration, identification, assessment, monitoring and control; the maintaining of reporting systems correlated with risk exposure and the establishment of exposure limits, inclusively for crisis conditions, according to the risk category of the fund under trusteeship; the supervision and monitoring of the outsourcing contract; ensuring qualified personnel with the necessary experience and knowledge; ensuring adequate staff training.
A privately managed pension fund shall be assigned a risk degree (low, average or high) based on a score established under Normative No. 7/2007 on the prospectus of the private pension scheme.
The draft normative also details the placements to be made by privately managed pension funds, based on the relevant legislation and on the portfolio structure authorized by CSSPP and introduces sub-limits for the investments performed.
The draft normative also details the placements to be made by privately managed pension funds, based on the relevant legislation and on the portfolio structure authorized by CSSPP and introduces sub-limits for the investments performed.
The regulations on investments in complex structured instruments such as forward contracts, derivatives, futures, options or swap contracts are subject to a separate chapter of the normative act.
Investments in derivative instruments shall be allowed only for the coverage of the forex and interest rate risk. The pension fund trustee shall notify CSSPP in before on the planned investments in derivative instruments, also attaching to the notification the analysis of each envisaged financial instrument, inclusively the risk assessment calculations.
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