Investment of Pension Funds Shall Not Exceed 20% of Total Asset Value

The Ministry of Finance has just issued Circular 86/2017/TT-BTC to guide the implementation of certain provisions of Decree 88/2016/ND-CP on the voluntary supplementary retirement program.

The investment activities of the retirement fund are conducted in accordance with the provisions of Article 20 of Decree 88/2016/ND-CP, which stipulates that the retirement fund may invest no more than 20% of the total asset value of such fund in securities investment fund certificates.

In the case of investments in securities investment fund certificates managed by the same enterprise managing the retirement fund, the enterprise managing the retirement fund may only charge a management fee once.

Regarding accounting, the fund is allowed to apply the accounting policies for open-end funds as stipulated in Circular 198/2012/TT-BTC and Circular 181/2015/TT-BTC for the accounting and financial operations of the fund.

Every month, the enterprise managing the retirement fund is responsible for determining the net asset value of the retirement fund and the individual retirement account value, as stipulated in Point c Clause 1 Article 21 and Point c Clause 1 Article 22 of Decree 88/2016/ND-CP.

The enterprise managing the retirement fund must establish regulations for determining the net asset value and the individual retirement account value as a basis for implementation. The regulations must include the following contents: Principles for determining the net asset value of the retirement fund and the individual retirement account value; detailed procedures for implementing valuation methods for each type of investment asset of the retirement fund; and the level of error for which the enterprise managing the retirement fund is responsible for compensating the participants of the fund.

If the enterprise managing the retirement fund erroneously determines the net asset value of the fund or the individual retirement account value and actual damage is incurred, it must compensate the participants of the fund.

The supervising bank is responsible for verifying and certifying the net asset value of the retirement fund and the individual retirement account value. If a misvaluation of the net asset value or the individual retirement account value is detected, the supervising bank must notify and require the enterprise managing the retirement fund to adjust within twenty-four (24) hours.

This Circular takes effect from October 1, 2017.

Source: Vietnam Financial Times

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