In 2017, equity pension funds yielded highest return for pension accumulation participants
The average return of pension funds operating in Lithuania was positive: the value of 2nd pillar pension funds increased by an average 4.51 per cent, of 3rd pillar pension funds – 5.19 per cent over the year. The highest return for the participants was earned by equity pension funds.
‘In 2017, all funds that invested at least part of their assets in equity recorded profits at the end of the year. Most of residents – 1.2 million, or 92.5 per cent of total 2nd pillar fund participants – accumulate their future pensions in such funds. The year was not that good for conservative funds, investing in bonds, while the best part of them posted low or negative returns. Overall, the recent few years were more positive for those investing in equity markets. It was one of the reasons for a one-fourth increase in the number of participants accumulating in equity pension funds over last year. It should be borne in mind however that the equity market is cyclical and the risk of recession should be duly taken into account, especially for those who are close to the retirement age,’ says Dalia Juškevičienė, Principal Specialist of the Long-term Saving and Investment Product Supervision Division at the Bank of Lithuania.
2nd pillar equity (up to 100% of equity) pension fund returns increased by 9.17 per cent, medium equity share (up to 70% of equity) pension funds – 4.94 per cent, and low equity share (up to 30% of equity) pension funds – 2.19 per cent on average. The value of conservative investment pension fund investment units dropped 0.61 per cent on average over the year. The result of these funds is negative for the first time since the inception of the 2nd pillar. It was due to the fact that the yields of government bonds comprising most conservative investment pension funds’ assets have for some time been either exclusively low or negative.
The investment units of 3rd pillar bond pension funds grew by an average 2.15 per cent, of mixed investment pension funds – 3.72 per cent, of pension funds investing in equity – 8.68 per cent in value over the year.
Increasingly more people opt for accumulating for their pension on their own. The number of 3rd pillar pension fund participants increased by 12 per cent, or 6,176 participants; fund assets grew by 21.45 per cent, to EUR 96.55 million at the end of 2017.
At the end of 2017, 20 2nd pillar pension funds and 12 3rd pillar pension funds operated in Lithuania, with more than EUR 1.33 billion accumulated in them.