BRATISLAVA, January 24, (WEBNOVINY) — The highest return on funds deposited in the second pension pillar over the whole period of its existence was achieved in the conservative fund. “The nominal value of saved funds has cumulatively increased by 17 percent,“ states an analyses of a long-term sustainability of the pension system that the Ministry of Labor, Social Affairs, and Family submitted for interdepartmental review. The average nominal annual return on funds in the conservative fund thus reached 2.66 percent. The return on funds held in the balanced pension fund swelled 8.2 percent in six years of its existence, while the average annual appreciation amounted to 1.32 percent. “The lowest return on deposited pension funds of 5.9 percent (average yearly appreciation of 0.96 percent) was registered in the growth fund,“ stated the ministry’s report.
During the first years of existence of the second [capitalization] pension pillar, pension fund management companies adopted a rather caution approach to investing, as the material shows, which was reflected in revenues that individual funds reported. “Appreciation in 2008 and 2009 was negatively influenced by the economic crisis, which caused a rapid decrease in the value of shares and share indexes on markets, to a large degree,” underscores the ministry. Considering the positive development on financial markets, appreciation of funds administrated in growth and balanced funds is expected to grow. “Legislative changes in the setting and evaluation of profitability of funds in the second pension pillar caused, however, that pension fund management companies took a very conservative approach to investing and pensions’ rate of return did not copy the rate of return on the financial market,” explained the Ministry of Labor, Social Affairs, and Family.
Introduction of the system of guarantees as of July 1, 2009 prompted pension fund management companies to sell all risky but at the same time most profitable securities, especially shares, from portfolios of all pension funds. “Pension fund management companies reduced the risk of having to make up for potential losses from their own sources and thus minimized chances to earn a higher return,” reads the material. All pension funds including growth funds changed their portfolios to strongly conservative ones with bank deposits (over 70 percent) accounting for the major part.
SITA
