Private Lump Sum Pension Plans
Through private lump sum pension package (ISPE) the ability to place a large amount of money in a low-risk investment is offered to conservative investors, which shall allow them to receive stable income flows yearly (annuity) as pension.
The key features of ISPE are:
- The investors’ money is placed in a number of government and corporate bonds. The selection of the countries and the companies that issue the bonds has been made with a view to finding an investment vehicle with low risk that offers better returns than the bank notes.
- The reason that a number of bonds has been used instead of only one bond is for reasons of risk diversification and for reducing the risk.
- The countries whose bonds are selected are Russia, China, Brazil, Hong Kong and Kazakhstan.
- Indicatively, some of the companies that have been selected are VTB, Severstal, MMC Norilsk, Sberbank, Petrobras, Noble Group and Alibaba Group Holding.
- These are all large multinational companies. They are under the auspice of the state and some of them enjoy de jure monopoly protection.
- The bonds that have been selected fall under the category of Eurobonds and are denominated in US dollars, the most reliable hard currency and the currency that is most resistant to the politico-economic crises over time.
- The bonds are of short- and medium-term maturity (ranging from 3 to 10 years).
- The gross annual MFIF yield is 6% and the net one is 5%.
- The bonds included in the portfolio pay a return each semester (including the portfolio rate of return).
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