WARSAW, Oct 29 (Reuters) - Polish pension funds should keep at least 75 percent of their assets in equities for two years longer than currently planned, until the end of June 2016, the finance ministry said on Tuesday.
The pension funds currently have about 40 percent of their assets in shares but the government wants the funds to stop investing in treasury bonds and raise their equity holdings.
'It is proposed (...) to state that in the period between February 4, 2014 and June 30, 2016 the joint value of (equity) assets held by a pension fund (...) may not be lower than 75 percent of the total assets,' the ministry said.
As part of a larger pension system overhaul, the government also plans to shift a large chunk of assets held by private pension funds to the state, hoping for more scope to borrow and spend, and a boost to the economy before a series of elections starting next year.
According to draft legislation, the state-guaranteed private pension funds will be required to transfer 51.5 percent of their assets to the state in February next year.
Following the transfer, the draft required the funds, known as OFEs, to hold 75 percent of their assets in stocks only until July 1, 2014, when their investment policy requirements would be loosened.
The new legislation is likely to be passed by parliament, but may see some opposition from the president and face legal hurdles.
In its own opinion on the issue, the Polish central bank said on Tuesday the pension changes were necessary, but that the 75-percent threshold may be harmful for the corporate debt market.
'We propose to revisit the legitimacy of setting the minimal limit of pension funds investment in stocks at 75 percent of the asset value,' the bank said.
'If OFE had a greater possibility to invest in these assets (non-state debt), they could help expand the market of long-term debt instruments and also improve financing conditions for the financial sector and some companies.'
(Reporting by Adrian Krajewski; editing by Stephen Nisbet) Keywords: POLAND PENSIONS
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