Asset managers are lining up to get a share of Poland's pension fund business as the government's privatization plan kicks into gear.
Mutual fund companies including Amvescap PLC and Pioneer Group have launched marketing programs across Poland, which is about to let private companies manage a portion of the country's pension assets.
"Pensions are clearly an opportunity," said Ben Phillips, a consultant at Cerulli Associates in Boston. "Poland is the largest and one of the first Eastern European countries to go ahead and do this."
Poles started selecting companies to manage their retirement money at the beginning of this month.
Under the program, the 2.7 million Poles ages 21 through 30 must choose a company to manage 20% of their pension assets, with the government continuing to manage the rest for now.
The program is voluntary for the 7.4 million Poles aged 31 to 50.
Initially, U.S. companies will be looking to slice up a small pie. Poland, a country of 39 million people, has a tiny market for mutual funds and other asset management. Asset managers estimate that $2 billion is up for grabs in the overhaul of the communist-era retirement system, but that amount could grow quickly as the system shifts even more to the private sector.
To get an edge, asset managers are pairing up with labor unions and other populist institutions.
Amvescap has formed its universal pension society - the entity required to manage pension assets - with the Polish Conference of Bishops.
The London-based company, whose AIM Management Group is one of the largest mutual fund companies in the United States, formed the alliance through its Invesco Retirement and Benefit Services subsidiary.
Boston-based Pioneer is exploring similar alliances but for now will rely on its existent distribution network of banks and the brokerage offices it owns, a spokesman said.
Pioneer has staked a claim as Poland's biggest mutual fund provider. In 1992, it set up the country's first mutual fund and now controls 80% of the $500 million market.
"Pioneer are the people to beat there," Mr. Phillips said. "They have been there so long."
Other companies vying for a share of the market are Alliance Capital, Credit Suisse, Deutsche Bank, and American International Group. Some companies are already licensed by the Polish government to handle pension assets; others are awaiting approval. Pioneer is among those registered; Amvescap applied this month.
According to Pioneer, 16 companies have been approved to handle pension assets and four more will be selected.
Poles will not be able to select from a menu of funds, as Americans are used to doing with their 410(k) plans. Each asset management company will offer one big fund, with its investment criteria closely controlled by the government. A majority of the investments must be in Polish securities, for instance.
Poland's mutual fund business is the second-largest in Eastern Europe. Hungary has the largest mutual fund market, with $1 billion of assets under management, according to Cerulli.