Memov proposes using part of second-pillar pension funds for state capital projects
Memov urges legal changes to let pension managers invest part of the more than €300m in the second pillar into state projects so 640,000 contributors could share profits.
The director of PIOM, Memov, proposed redirecting a portion of private pension-fund assets from the second pillar into state capital projects as a way to expand investment options and increase returns for contributors.
Memov said pensions firms in the second pillar should be allowed greater freedom to invest on markets. He noted that "over 300 million euros" currently flow into the second pillar and that existing law allows placement on foreign exchanges, but argued legal changes are needed to broaden where those funds may be invested.
Proposal to link private funds with public investments
As one concrete idea, Memov suggested pension fund participants — some "640,000 insured" people — could become shareholders in large state projects such as Chebren and Galishte and share in their profits. He proposed regulatory changes so pension managers could consider investments in state capital projects alongside stock-market placements.
On implementation, Memov said a central supervisory mechanism would be necessary: "The idea is the following: MAPAS is held and will control the placements of those companies," he said, adding a layered risk approach could be introduced so that younger contributors assume higher risk, middle-aged contributors take moderate risk, and a third category of citizens faces no risk.
Asked how to tackle the informal economy, Memov said the state must use all available mechanisms to prevent evasion. He also said collection of contributions is handled by the Public Revenue Office (UJP) and urged enforcement bodies to do their work, arguing that if employers pay full contributions, workers will earn higher pensions in the future.
Memov concluded that changing the investment and collection methodologies would create incentives for employers to pay proper contributions and for funds to build larger equity portfolios, which in turn could increase long-term returns for insured citizens.
Photo: press material from the event
