Cyprus pension fund law passed

The House of Representatives approved the Draft Law regarding the establishment, operation and supervision of Pension Funds.

Under the new Law, the Pension Funds are subject to investment rules and regulations requiring them to seek professional investment advice, and additionally to substantially diversify their asset classes by including financial instruments listed on regulated stock markets.

The passage brings Cyprus closer to meeting EU directives, since even since Cyprus joined the EU, it had not incorporated the EU’s Pension Funds Directive in force since September 2005.

The introduction of this new Law will drive private Pension Funds to seek professional investment advice and make use of organised exchanges, thus the flow of funds from the Pension Funds into local equities will increase substantially. We note that at present the biggest part of these funds are in time deposits with banks and cooperative institutions.