NON-PROFIT ORGANIZATION, JOINT STOCK COMPANY, OPEN-ENDED PENSION FUND “UNIPENSIJA”
ANNUAL REPORT, 2003
Report of the Management
Performance in the Report Year
For the non-profit organization, joint stock company, open-ended pension fund “UNIPENSIJA” (henceforth – A/S UNIPENSIJA) the Year 2003 was favorable in attracting both business and individual clients. Thus A/S UNIPENSIJA , by reaching a pension fund accumulation of 3.19 million LVL, has become the leading open-ended pension fund in Latvia, and its ever increasing capital base provides a strong foundation for long-term development. The pension capital of A/S UNIPENSIJA increased by 81%, surpassing by 10% thetotal annual growth of the open-ended pension funds of Latvia. At the end of 2003, the market share of A/S UNIPENSIJA was 50% of the accumulated pension capital.
The number of participants in the A/S UNIPENSIJA more than doubled, increasing to 5,852. in 2003. The fund concluded 56 new collective and 1,899 individual participation contracts. The number of individual participation contracts increased nearly fivefold. The pension plan assets grew by 1.8 times in 2002 and reached 3.2 million LVL.
A/S UNIPENSIJA continued its successful collaboration with the asset management IS “Optimus Fondi (Optimus Funds)”, which became a subsidiary of A/S “Latvijas Unibanka” in 2003.Consequently, clients of A/S UNIPENSIJA are entitled to discounts of their asset management fees, if they have simultaneously joined one of the government-funded “Optimus Fondi” pension asset investment plans.
The holding bank of the assets is A/S “Latvijas Unibanka”, which found no infractions in the handling of the pension funds by the asset manaager in 2003
For its clients the A/S UNIPENSIJA perfected the option of receiving their accumulated private pension in installments – first the tax-free earned interest income, and only then the contributions, from which income tax is withheld.
In 2003 A/S UNIPENSIJA, in collaboration A/S “Latvijas Unibanka”, created a client reward program, which provides considerable discounts to several bank services, such as servicing the payment cards, obtaining loans and making deposits.
Products
A/S Unipensija offers two pension plans - in LVL and EUR, which are suited for an unlimited number of collective and individual participants. Descriptions of the pension plans are available at the A/S UNIPENSIJA website..
Electronic data transmision is available for the convenience of the members of collective contract participants. Individual participants are offered the opportuniy of making payments by using the automatic withdrawal and regular A/S Latvijas Unibanka payment plans..
In 2003, A/S UNIPENSIJA effected changes in the pension plan “UNI-1”, in order to conform to the amendments to the Law “On Private Pension Funds”, concerning asset investment regulations. The pension plan “UNI-1”adheres to an investment policy of moderate risk and moderate return
The pension plan “EIROPENSIJA” satisfies the client demand for accumulating assets in the euro currency. With the movement of Latvia toward the European Union, the pension plan “EIROPENSIJA” grew by more than 60,000 EUR in 2003. “EUROPENSIJA” follows a moderate risk investment strategy by placing its assets chiefly in fixed-income securities denominated in EUR.
In view of the uncertain political and econmical world situation in 2002, causing fluctuations in the world financial markets, the A/S UNIPENSIJA made its investments mainly in domestic financial instsruments. Information on the investment structure and return is updated monthly on the A/S UNIPENSIJA website.
Performance results
Compared with the previous year income, the A/S UNIPENSIJA basic activities income increased 1.7 times and contributed 47% of the total income of the report year. During the report year , the fund derived the largest share of its performance-enhancing income from investing its assets, as well as from selling and reevaluating securities acquired.
A/S UNIPENSIJA has concluded contracts with clients in all regions of Latvia, increasing its paid-in pension capital by 80%. The average the individual account has a balance of about 545 LVL, and the average monthly contribution is 27 LVL.
More detailed information about the company’s performance in 2003, can be found in the Financial Report, which has been prepared in accordance with the “Regulations on the Annual Reports of Private Pension Funds”, issued by the Financial and Capital Market Commission as well as with laws and regulatory acts of the Republic of Latvia, which govern pension fund accounting and reporting.
Development
The basic principles of A/S UNIPENSIJA are continued development and stewardship of the interests of its clients. To satify the expectations of businesses and potential clients, as well as to insure the highest marketing standards, A/S UNIPENSIJA is constantly improving and perfecting its information presentation. During the past year, in collaboration with A/S “Latvijas Unibanka”, several marketing and sales campaigns were organized, seminars were conducted and informative initiatives with employers untertaken.
The goal of A/S UNIPENSIJA for 2004, is to maintain the momentum of its developmental dynamic, attracting both business and individual clients, and increasing the total assets of its pension plans.
In 2004, the participants of A/S UNIPENSIJA will be able to check on their private pension accounts through e-mail, and the internet bank of A/S “Latvijas Unibanka”. The A/S UNIPENSIJA continues to evaluate and develop the potential of wider cooperation with its existing clients, and to form cooperative projects with other financial institutions
To provide a wider selection of options to both existing and potential clients, A/S UNIPENSIJA is planning to introduce in 2004 a new pension plan denominated in LVL with a more dynamic investment policy. The pension plans offered A/S UNIPENSIJA will have an asset investment policy similar to that of the government-funded pension investment plans offered by IS “Optimus Fondi”.
To perfect legislation and foster the interest of the public in making long-term investments for a comfortable old age, A/S UNIPENSIJA will continue its collaboration with other licensed private pension funds.
Legal standing
The non-profit organization, joint stock company, open-ended pension fund “UNIPENSIJA”, was registered in the Register of Enterprises of the Republic of Latvia, on March 10, 2000, and received a license to begin operations on May 30, 2000, in conformance to the Law “On Private Pension Funds”. The pension fund offers two licensed pension plans. In 2002, no changes were made in the statutes, but there were changes in the composition of the Council and the executive management
Chairman of the Board
______
Viesturs Neimanis
February 6, 2004
Income and expenditures for 2003
AttachmentNo. / 2003
LVL / 2002
LVL
Income from basic activities / 1 / 40 703 / 23 821
Client enrollment expenses / 2 / (14 207) / (7 580)
Administrative expenses / 3 / (114 074) / (87 335)
Income from investments in securities / 4 / 43 036 / 46 751
Other income / 5 / 11 510 / 8 886
Other expenses / 6 / (9379) / (11 474)
Unattributed expenses at the end of review period / 7 / (42 411) / (26 931)
Attachments from pp.12 to 18, are an indispensable part of this financial review.
Chairman of the Council Chairman of the Board Executive Director
______
Andris Bērziņš Viesturs Neimanis Dace Brencēna
February 27, 2004
Balance sheet
No. / 12.31.2003
LVL / 12.31.2002
LVL
Assets
Intangible assets
/ 8 / 21 197 / 12 154Capital assets
/ 9 / 3 565 / 4 000Financial investments
Debt securities and other fixed-income securities
-Securities held for trading / - / 286 002-Securities held till maturity (long-term investments) / - / 269 878
-Financial assets available for sale / 10 / 446 736 / -
Total financial investments / 446 736 / 555 880
Debtors
/ 44 / -Deferred expenses and accrued income / 11 / 17 442 / 22 593
Cash equivalents and balances due from credit institutions / 12 / 315 / 698
Asset subtotal / 489 299 / 595 325
Pension plan assets / 13 / 3 207 668 / 1 778 496
Total assets / 3 696 967 / 2 373 821
Liabilities
Capital and reserves
Paid-in capital / 400 000 / 400 000
Unattributed expenses of previous years / (108 122) / (81 191)
Unattributed expenses at end of review period / (42 411) / (26 931)
Total capital and reserves / 249 467 / 291 878
Accruals for liabilities and payments
/ 14 / 1 709 / 1 643Creditors
Indebtedness to interconnected and sister enterprises / 15 / 226 918 / 289 563Accrued income and deferred expenses / 16 / 2 592 / 6 721
Other creditors / 17 / 8 613 / 5 520
Total creditors / 238 123 / 301 804
Liabilities subtotal / 489 299 / 595 325
Pension plan liabilities
/ 18 / 17 642 / 14 786Pension plan capital
/ 18 / 3 190 026 / 1 763 710Total liabilities / 3 696 967 / 2 373 821
Attachments from pp.12 to 18, are an indispensable part of this financial review.
Chairman of the Council Chairman of the Board Executive Director
______
Andris Bērziņš Viesturs Neimanis Dace Brencēna