The Finance Ministry's Supervisor of Capital Markets, Insurance and Savings Yadin Antebi, has called on institutional investors and fund managers to venture out of local markets to spread risk.
"The Bachar or capital market reform was launched to diversify the market, to spread capital risk and foster competition. We had hoped that post-Bachar we would also see provident and pension funds distributed abroad as in other OECD (Organization for Economic Cooperation and Development) countries," said Antebi at the "Bachar: The day after" conference in Tel Aviv Thursday.
"We have removed all the obstacles, now it is just a psychological barrier for institutional investors to move out of the local market."
Speaking to representatives of leading insurance companies and fund management houses, Antebi warned that, in the long-run, the unequal distribution would not be healthy to the market.
"The challenge for us is to encourage institutional investors to spread risk abroad."
In 2005, about 7.4 percent of investment by institutions went overseas.
Representatives of Mivtachim Pension Funds, who invest about 10% of their funds abroad, said that apart from a psychological issue, investment abroad would require international representation involving high maintenance costs.
The conference focused mainly on how to deal with post-Bachar changes for the employer and the employee regarding the recent directive to ensure objective pension consultancy services for consumers and to eliminate conflicts of interest. As a result of the directive, the choice of pension plan has shifted from the employer to the employee and created a new reality.
"One of the main problems in the practice of the directive is whether the employee would be in a position or have the necessary tools to make informed decisions about the right pension plan," said Avi Barak, Head of Labor and Human Resources Division of the Manufacturers Association of Israel.
The Bachar reform, signed into law last summer, required banks to sell their holdings in provident and mutual funds and allowed them, instead, to sell to their clients funds owned and managed by other companies. Banks would then charge the companies a distribution fee. Pension funds that have not been operated by banks until now would not be able to pay commission to a pension consultant, and all revenue would be in accordance with limits on distribution fees.
Antebi included a mechanism to ensure that pension companies would not pay banks for clients receiving consulting after December 31, 2007, but only for those advised during the transition period.
As a result of the new regulations, Bank Discount announced on Thursday an agreement to distribute the financial products of Ayalon Insurance, such as the Pisga pension fund.
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