Croatian pension funds are interested in projects with which the government aims to reduce the budget deficit and public debt, but their interest is not unconditional, the heads of four mandatory pension funds said on Monday.

They spoke at a press conference organised by the UMFO association of pension management and insurance companies at which the four pension funds presented their 2015 results.

The chairman of the UMFO and of the board of the Erste Plavi pension fund, Petar Vlaic, said that no agreement had yet been reached with the government on the participation of the pension funds in government projects, but that talks were under way.

"We have expressed our interest not just in infrastructure projects, but also in investing in Croatian companies, and I am certain that we will reach an arrangement whereby the Croatian pension funds will increase their investment in Croatian companies," Vlaic said.

He said that talks were under way with the government on the problem of the HAC motorways operator, but that no agreement was reached yet. "We are advocating an initial public offering. We believe that the Croatian motorways have potential and that the pension funds can contribute to it. We have the funds to buy (a stake)."

Vlaic said that under the law the pension funds can invest in infrastructure up to 15 percent of the assets they manage, which is currently about HRK 10.75 billion in total. "We have studied the motorways system in Croatia and we have the expertise. If we were to invest in the motorways, we would certainly want to have management control and would insist on business rationalisation. In particular, we would want to increase revenue without having to increase toll rates and increase the share of truck transport, which today accounts for only 10 percent of the toll revenue."

The head of the Raiffeisen pension fund management company, Damir Grbavac, said that the interest of the pension funds in government projects was not unconditional and that their decision would not be a joint one. "Each of us will work to ensure that the projects are well structured and then each will decide on their own, in the interests of their members, rather than as a holding company," Grbavac said.

The board chairmen of the mandatory pension fund management companies said they could see no reason for reducing or abolishing payments into the Second Pension Pillar and that payments should actually be increased.

Vlaic warned that the problem of pension payments would only deteriorate given alarming demographic data for Croatia, which show that by 2030 the size of the active work population in the country could be reduced by nearly 385,000 and the number of pensioners could increase by more than 207,000, whereby the current pensioner-employee ratio of 1:1.15 could fall below 1:1 and Croatia could end up having more pensioners than people in work.

Vlaic said that the purpose of the Second Pension Pillar was to ease deficits in the pension system and the effects of negative demographic developments. He said that 1.73 million members, which is more than the total number of employed people, paid contributions into the Second Pension Pillar.

At the end of 2015 the four mandatory pension funds managed HRK 74.04 billion in total assets, which was 22.5 per cent of GDP. Of that amount, HRK 49.02 billion accounted for contributions and HRK 25.02 billion was earnings from the investment of contribution funds. The average annual yield over the last 14 years of the existence of the four funds was 5.88 percent, or 3.65 percent in real terms (less inflation).

The bulk of the funds' assets, or nearly HRK 54 billion (72 percent) is invested in government bonds, while HRK 7.74 billion is invested in domestic bonds. Last year the pension funds were involved in all major recapitalisation projects investing, inter alia, HRK 300 million in the Podravka food company and HRK 164 million in the Croatian postal savings banks HPB, Vlaic said.

 

(EUR 1 = HRK 7.62) 

Related stories

PM meets execs of pension fund management societies

HUB: Croatians' financial assets rapidly growing

Motorway toll revenues up 6.5% to HRK 2.4bn

Latest news

Syrian opposition rules out future role for President al-Assad

The Syrian opposition said Friday it would not accept any role for President Bashar al-Assad in the future of the war-torn country, reacting to a recent US shift saying that removing al-Assad is no longer a priority for Washington.

Russian Army integrates breakaway forces of Georgian province

Parts of the small fighting forces of the Georgian breakaway province of South Ossetia have been placed under Russian military control, Russian Defence Minister Sergei Shoigu said on Friday.

Czech Republic's Pilsner Urquell beer is now Japanese

Japanese brewing company Asahi completed its takeover of the Czech brewery Pilsner Urquell on Friday, Asahi said in a statement.

Judge approves 25-million-dollar settlement of Trump University case

A US district judge on Friday approved a 25-million-dollar settlement of lawsuits and state fraud allegations against Trump University, the US president's now-defunct business venture.

Former Thai premier Thaksin to junta on reconciliation: 'Cut me out'

Former Thai prime minister Thaksin Shinawatra on Friday announced that he is not interested in the junta-led reconciliation process, three days after the junta handed him a half-a-billion-dollar tax bill for his past business deal.

Dalic: We welcome possible deal between Agrokor and banks

The government welcomes the possibility of an agreement being concluded between the Agrokor food company and creditor banks, and the bill on vitally important companies is not a fallback plan but the result of the government's care for the overall economic and financial stability of Croatia, Deputy Prime Minister and Minister of Economy Martina Dalic told a press conference in Zagreb on Friday.

Croatia, China sign action plan for cooperation in agriculture

The Croatian and Chinese ministries of agriculture on Friday signed an action plan for cooperation in the field of agriculture for the period 2017-2018, the Croatian ministry said in a statement.

ZSE indices up, Agrokor shares in focus of investor interest

The Zagreb Stock Exchange (ZSE) indices on Friday rose by more than 1.8%, with stocks of the Agrokor food and retail concern being in the focus of investor interest again.

Berlin police defend handling of Berlin market attacker

Berlin police defended themselves on Friday against accusations that they stopped surveillance on Berlin Christmas market attacker despite knowing in June 2016 he was dangerous.

Croatia, creditors tailor emergency measures to save tottering giant

Croatia's tottering retail and food giant Agrokor reached an agreement with its creditors, putting its debts standby and allowing it to continue working during emergency restructuring, the Croatian branch of Austria's Erste Bank said Friday.

Agrokor's creditors say standstill agreement to go into force today

A standstill agreement regarding the Agrokor concern's existing financial obligations to banks will take effect on Friday, additional capital will be injected into the concern in the coming days and the concern will be actively restructured, which includes a change of its management, it was said on Friday after a meeting between Agrokor's suppliers and creditor banks.

Palestinians, UN slam Israel's new settlement plan

Palestinians, Israeli activists and the UN lambasted the government of Israeli Prime Minister Benjamin Netanyahu on Friday, a day after it gave the go-ahead for the first new West Bank settlement in a quarter of a century.

South Sudan rebels release three abducted foreign oil workers

South Sudanese rebels have released three foreign engineers they abducted in early March in the oil-rich Upper Nile region, Foreign Affairs Ministry official Mawein Makol Arik said on Friday.

Turkish opposition: Imprisoned party chief has gone on hunger strike

The head of Turkey's pro-Kurdish opposition party has launched a hunger strike from prison.

European leagues threaten Champions League schedule clashes

The European Professional Football Leagues (EPFL) on Friday threatened schedule clashes on Champions League matchdays in an ongoing dispute with the governing body UEFA.

Danish court revokes citizenship of IS volunteer

A Danish appellate court on Friday stripped a man of his Danish citizenship for volunteering to fight for the extremist Islamic State in Syria.

Banks and Agrokor agree on key elements of standstill agreement

Member banks of the coordinating committee of financial creditors and representatives of the Agrokor food company have in principle agreed on key elements of a standstill agreement, which is expected to be signed later today, announcing changes in the company's management team, Erste Bank said in a statement on Friday afternoon.

Syrian man on trial in Sweden; mosque attack labelled terrorism

A Syrian man went on trial Friday in the southern Swedish city of Malmo, charged with terrorism and arson after an attack last year on a building used as an assembly hall by Shiite Muslims.