WARSAW, Sept 13 (Reuters) - Poland may ban private pension funds from investing in foreign sovereign bonds, a deputy minister said on Friday, another step in a pensions overhaul that has bruised Poland’s image with investors.
Last week, Poland announced plans to transfer 121 billion zlotys ($38 billion) in local bonds held by private pension funds to the state and write them off to curb the public debt and lower the general government deficit.
The private funds do not currently invest in foreign government bonds, but some analysts had expected the funds to explore this segment after the transfer of the local debt.
“We’re thinking that we won’t let pension funds invest in treasuries of other countries,” Deputy Finance Minister Wojciech Kowalczyk told reporters, without giving further details.
The proposed transfer of Polish debt would leave the pension funds, including global firms such as ING, Generali , Allianz, Aviva with mainly equity holdings worth some 111 billion zlotys in their portfolios.
However, Poland also plans to switch the remaining pension savings of Poles to a state retirement fund unless individuals indicate within three months they would rather keep them with the private funds.
By preventing the funds from investing in fixed-income products other than corporate bonds, analysts said their portfolios could become more volatile which would limit the number of Poles keeping their holdings in private hands.
“I would not bet on a lot of people staying in OFE (private funds). Many would consider it as too risky,” said Piotr Bielski, senior economist at Bank Zachodni WBK.
Poland has a hybrid pension system at the moment. Mandatory contributions are made into both the state pension vehicle, and the private funds. ($1 = 3.1653 Polish zlotys) (Reporting by Pawel Florkiewicz, Writing by Dagmara Leszkowicz; Editing by Toby Chopra)