Senator of Italy
In 2018, the Russian non-state pension market increased 6.4% YoY to RUB 3,850 billion. The pension savings growth rate decreased more than twice compared with that in 2017 (12.2%), making the increase in absolute terms the lowest since 2011. The continued shedding of toxic assets from some NSPF portfolios has had an even greater adverse effect on market return in 2018 than a year earlier. As a result, the weighted average rate of return on pension investments was hardly above zero (0.1%). The average OPS account balance has been declining for the second year in a row. In 2018, it decreased to RUB 68,000 from RUB 69,200. The overall positive dynamics was driven by the PFR-to-NSPF cash flow (+RUB 163 billion) and the rate of return on invested pension reserves (5.2%) which was considerably higher than that on pension savings. Some NSPFs have faced the negative revaluation of their assets, but its adverse impact on the aggregate value of the pension reserve portfolio has been less significant.
The market is consolidating in anticipation of the switch to the Individual Pension Coefficient (IPC); the leading pension funds are merging or acquiring smaller players. In 2018, there were several pension fund groups, which completed the integration of their businesses. This produced changes in the list of the NSP market leaders and fostered the consolidation process. By year-end 2018, top-10 NSPFs accounted for almost 90% of total pension assets, making the NSP market an oligopoly. The market saw several consolidation centers, mostly represented by funds with links to industrial or financial government-related entities. Although the future of the NSP market is highly uncertain, it is clear that only financially strong NSPFs with advanced IT systems and other resources, affordable to larger market players, will have access to new flows of pension money. In such circumstances, many smaller NSPFs will either look for strategic investors or leave the market.