Pension funds shift to private hands

The Latvian State Treasury expects some 30 percent of the pension fund money it manages to go under management of private pension funds as of Jan. 1, 2003, as taxpayers are now free to chose any pension fund manager.

The state treasury's funded pension administration sector head Uldis Pauksens said that the treasury was expecting as much as 30 percent of the pension funds to go under private fund management, and that this would not cause any loss or complications for managing the remainder.

Pauksens said that a precise number of people entrusting their pension fund to private funds would be known by mid-January.

The Latvian state-funded pension scheme started working in July 2001, while only the state treasury was allowed to manage these funds until the end of 2002.

By Dec. 1, 2002, the state-funded pension fund had received almost 11.5 million lats (18.7 million euros) under management, posting profits of almost 450,000 lats from investing in Latvian securities and the country's largest banks.

Participation in Latvia's funded pension scheme is compulsory for all persons under the age of 30, while for people up to the age of 49 participation in the funded pension scheme is optional.