Draft National Demographic Fund Act submitted for public consultation

The main objectives of the draft act are to:

• ensure the independent and autonomous management of state assets, separate from day-to-day political influence;
• increase the value of the Fund’s assets by transferring investments of the Republic of Slovenia, Slovenian Sovereign Holding, the Pension Fund Management, the Consulting and Management Company, the Pension and Disability Insurance Institute of Slovenia, and the Health Insurance Institute of Slovenia to the ownership of the Fund;
• allocate returns on assets to co-finance the pension fund on the basis of intergenerational solidarity and to improve the demographic situation;
• establish a transparent, secure and profitable investment management system with a clear division of powers and responsibilities, limiting the risks of corruption and other unethical conduct;
• align the Fund’s operations with Slovenian and international good practice guidelines for the management of pension and demographic fund assets.

The main solutions proposed in the draft act are as follows:

• The Fund will be able to acquire investments, conclude legal transactions, dispose of investments for the purpose of meeting its obligations, exercise management and property rights, and manage asset-related risks.
• The Fund’s resources will be invested exclusively for the benefit of co-financing compulsory pension insurance, policies for older people and family policy measures. Investments will be diversified and aligned with the maturity of expected future liabilities.
• As a shareholder or member, the Fund will exercise voting rights at general meetings, ensure legal protection, and promote good corporate governance and appropriate remuneration systems in companies in which it holds equity investments.
• The sale of equity investments will be carried out according to established and clear methods.
• The Fund will have a general meeting, as well as a supervisory board and a management board. The act will lay down strict conditions for membership of the latter two bodies in terms of education, work experience, integrity and incompatibility of functions, and will provide for stricter rules on the limitation period for liability for any damage.
• The Fund will publicly disclose its investment management policy, criteria for measuring the performance of companies, annual and audit reports, and information on the composition of management bodies, including declarations on the disclosure of conflicts of interest.

The essence of the draft act is to ensure that the Fund has the largest possible asset base, as this is the only way to create sufficiently large additional and permanent sources for the growth of the Fund’s assets and to achieve the highest possible returns, without unnecessary duplication of functions and costs arising from the current larger number of managers of similar state assets. This will also establish a unified, transparent, secure and more efficient system of corporate governance of state-owned companies.

Such a method of managing state assets will enable the Fund to perform its core function effectively, namely co-financing the pension fund and thereby easing the burden on the state budget, so that other social, development, investment and state policies can continue to be implemented smoothly.

Since demographic challenges concern all generations, the use of the Fund’s resources will be based on general intergenerational solidarity, involving both younger and older citizens. The draft act therefore provides for mechanisms for the accumulation of the Fund’s assets, payments into the pension fund, the provision of resources to co-finance policies for older people, and the provision of resources for family policy measures.

Interested members of the public may submit comments and responses to the draft National Demographic Fund Act via the eDemocracy portal by 21 July. The Ministry of Finance will carefully examine all comments and proposals received.