Last month, Russia's President Yeltsin signed the new law on Non-State Pension Funds (NPFs), following its approval by the Russian State Duma and the Council of the Federation the previous month.

The law sets the scene for the de- velopment of pension funds in Russia and comes six years after the 1992 presidential decree on NPFs.

Under its provisions, a regulatory apparatus is confirmed for the supervision of funds and how they are licens-ed through an inspectorate of NPFs under the Ministry of Labour and So-cial Development. New rules specify minimum capital for funds, amounting to $200,000 and imposes a maximum level of fees that can be imposed.

Funds are only able to invest through a separate asset management company, except for investments in state and municipal bonds and bank deposits, which can be handled di-rectly by the fund. Funds also have to appoint a custodian to hold their securities.

NPFs can be on a defined benefit or defined contribution basis, though the details have be set out in the scheme rules.

Welcoming the law for the status it confers on NPFs, pensions consultant Yevegeny Yakushev, who is with Rincoplus in Moscow, says that it defines pension funds as a 'field of industry', bringing into line with the other fields of banking and insurance, and out of the 'other commercial organisations category'. It clarifies the position of pension reserves as belonging to the NPF. Previously, there were views they were the property of either the employee or the employer."

Anatoliy Loshakov who heads up the NPF of the Electric Power Industry of Western Siberia, who was involved in the discussions of the new law, says he is pleased because it sets out general principles and is a first step. "This law gives us the chance to develop pension funds further in future legislation." But Yakushev says the law is inevitably a compromise since it was under discussion for some years. "The result is that no one is fully satisfied with it." Describing it as something of a 'black box', one aspect he believes needs to be clarified is whether it is conceived as a second or third pillar provision, as this is not clear. Fennell Betson"

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