The Government approved the amendment to the Act on Additional Pension Insurance, which should impose more restrictions on pension funds. We summarise the most important changes below:

  • basic capital of pension funds should be increased from current Ke 20,000,000 to Ke 50,000,000;
  • banks as shareholders of pension funds should not be entitled to act as depositories;
  • changes of pension plans should be approved by the Ministry of Finance and the Ministry of Labour and Social Affairs; otherwise they would be considered invalid;
  • the participants of additional pension insurance could be provided with pensions after at least 36 months of saving, but not sooner than the participants are 55 years old (current threshold is 50 years);
  • a pension fund should not be allowed to establish a pledge over its own property;

It is expected that the Amendment will be effective from 1 January 1998.

Separately, the Ministry of Labour and Social Affairs is considering establishing an obligatory pension saving plan. Based on this option, employers and the state would be obliged to provide contributions to this system.

The Ministry also wishes to continue increasing the pensionable age. Men and woman would be entitled to pensions after they are 65 years old.

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