Emerging private pension market up 60% in 2011

TIRANA, Feb 7 – Although in its initial stages, the private pension fund, with currently only three market operators, continued growing in 2011. Data published by the Albanian Financial Supervisory Authority show the private pension market rose by 58 percent to 177 million lek at the end of 2011, up from 112 million lek at the end of 2010.
Data show 44 percent of total contributions are paid by volunteer members while the remaining majority part by employers with average monthly contributions varying from Lek 2,000 to 13,600.
The number of contributors in the three currently operating companies, Sigal Life Pension, Raiffeisen Pensions, and Sicred Pensions rose to 6,295 up from 5,275 at the end of 2010.
The companies’ total assets at the end of the third quarter of 2011 were estimated at 142 million lek while net revenues at 6 million lek.
Two new companies entered the marked in 2011 following changes in the private pension market law in December 2010.
The private voluntary pension market has a small share of the Albanian non-banking financial market and is still below its real potential for further development, experts say.
Albania’s non-banking financial sector, dominated by micro-credit financial institutions and insurance companies shrank to 5.5 percent of the total financial system at the end of the first half of 2011, compared to 5.7 percent at the end of 2010. The data are made available in the latest Bank of Albania report on financial stability report for the first half of 2011. The non-banking financial sector, composed of financial institutions supervised by the central bank and the Financial Supervisory Authority, represented 4.78 percent of the GDP at the end of June 2011 compared to 4.9 percent in December 2010.
The sector is dominated by non-banking financial institutions whose assets account for 2.97 percent of the total, followed by insurance companies at 1.65 percent, credit-saving unions, at 0.87 percent and the private pension funds at their initial stages representing only 0.01 percent of the GDP.
In its latest report the European Commission concludes that there remains insufficient administrative capacity in the non-banking financial sector to enforce market surveillance and proper implementation of legislation. “Further efforts are needed with regard to the securities markets. Investment services legislation and infrastructure are at an early stage. Overall, preparations are moderately advanced.”