The Bank of Russia has put forward a proposal to relax certain restrictions on pension reserve investments, allowing non-governmental pension funds (NPFs) to allocate more resources into higher-risk assets. This move is part of a broader strategy to enhance investment flexibility while maintaining stringent requirements for stress testing and fiduciary responsibility.
A draft ordinance from the Bank suggests removing existing limits on investments in shares, convertible, subordinated, and perpetual bonds, as well as securities issued by Russian regions and municipalities. The proposal also seeks to expand the range of shares NPFs can purchase beyond current risk limits. Presently, NPFs are permitted to invest in shares of 47 Russian companies listed on the MOEX Russia Index. The draft proposes extending this list to include exchange-traded liquid shares with credit ratings, potentially involving around 60 companies. This change aims to increase NPFs’ involvement in the equity market.
The permissible percentage of assets with an additional level of risk is proposed to rise from 7% to 15% of pension reserves’ value. This category will encompass all assets that are challenging to evaluate.
These expanded investment opportunities are expected to improve NPFs’ efficiency while ensuring robust financial resilience and safeguarding pension resources against excessive risks.
Additionally, the Bank of Russia recommends reducing the limit on investments in a single entity’s assets from 10% to 5% by 2030. This amendment is intended to mitigate concentration risk and enable further diversification of NPFs’ investment portfolios.
