Private pension funds are springing up all over the world. Russia, for example, now has an estimated 600 private pension funds.
In Russia, some of the pension funds are enterprise based. Others are stand-alone pension funds, rather like mutual funds, offering the equivalent of individual retirement accounts to Russian workers.
Unfortunately, according to Vladimir A. Abyshkin, vice president of Private Pension Fund Dobroe Delo, more than 80% of these funds are only interested in accumulating money, not in developing an important piece of social infrastructure for Russian workers to supplement the declining government pension system.
Mr. Abyshkin, who visited the United States earlier this month to learn more about the U.S. private pension system and met with Richard Hinz, director of research and economic analysis at the Pension and Welfare Benefits Administration of the Department of Labor, and others such as James Klein, executive director of the Association of Private Pension and Welfare Plans, said his own fund was started only in April and now has about 50,000 members. Most were through individual enrollment, he said, but some were through enterprises that had selected his company as the pension vehicle.
The fund has four offices in Moscow and 11 in the rest of Russia, where individuals can get information about pension funds and investments, and enroll if they wish.
Mr. Abyshkin said private pension funds in Russia operate under severe handicaps. First, there is no legislation regulating pension funds, or even specifically authorizing them, and there is no tax exemption for pension fund contributions or earnings. Second, there are no custodians for the assets, and third, most people don't understand what a private pension fund is or why it is needed.
"Our fund," said Mr. Abyshkin during an interview in New York, "has made many attempts to explain what a private pension system means. For example, on Oct. 5 we published a full-page article ... in Izvestia, the most important newspaper in Russia. We tried to give an explanation of what the role is of a private pension system in the financial markets."
His fund also sponsored an educational program on the leading television channel for the same purpose.
Mr. Abyshkin said he has also met with government ministers and deputies in the Duma, the Russian parliament, to explain the role of pension funds. One leading government official had said private pension funds were good if they invested 80% of their assets in government bonds, he said. "We hope we have changed his understanding of pension funds," he added.
Private Pension Fund Dobroe Delo has investments in several Russian enterprises, including a publishing company and a building renovation in Moscow.
Mr. Abyshkin said as the fund's assets grow, it will expand its investments both inside Russia and outside. He also is interested in learning more about pension systems throughout the world. And Mr. Abyshkin's fund might well be able to provide insight and advice to U.S. funds - mutual or pension - interested in investing in Russia.
