CYPRUS - Pension funds must modernise management practices to provide healthy returns in the future, KPMG and Hewitt have warned.
In a recent seminar organised by KPMG’s Financial Advisory Services and Hewitt Associates (Cyprus), the firm's said there was nearly €2bn sitting in accounts held by the employee provident and pension funds. Less than a tenth of that yielded anything more than "ultra conservative" returns of cash in the bank and government bonds.
Seminar speakers warned those funds would only be able to provide healthy returns to their members if they improved codes of practice and governance, as well as by introducing sound investment policies.
Cyprus passed the European Directive into law that laid down strict ground rules for pension funds and increases the responsibilities of the funds’ management committees.
However, the recent case of the troubled EAC pension fund that is still struggling to recover the millions wiped out from its portfolio through the dealings of Yiannos Andronikou and his investment management company, Suphire, is one of the reasons why pension fund committees are hesitant to make any medium-risk investment, let alone high-risk, according to local media.
Hewitt Associates (Cyprus) director Philippos Mannaris said: “The biggest problem facing the development of pension funds in Cyprus is the insufficient old law and the implementation of the new law.
"People must understand that pension funds are the only hope that many workers have nowadays. Pension funds must realise that they have obligations piling up which some of them will not be able to meet, unless they reform and restructure.”
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