More than half of 2nd pillar pension funds earned positive returns despite the erratic half-year and Brexit
In the first half of 2016, 11 out of 21 2nd pillar pension funds operating in Lithuania earned positive returns. In the period which was extremely erratic for financial markets, conservative investment pension funds performed better, while the total value of the net assets of 2nd pillar funds grew by EUR 128.31 million, to EUR 2,246 billion at the end of the half-year.
‘Good pension fund performance for the second quarter, even after the Brexit referendum, which shocked financial markets, offset the influence of negative trends that prevailed at the beginning of the year, enabling to retain the assets of pension fund participants,’ says Audrius Šilgalis, Chief Specialist of the Financial Services and Market Analysis Division at the Bank of Lithuania.
In the first half of this year, the investment units of the pension funds group investing in bonds grew by 0.77 per cent in value. The investment units of other pension funds, investing at a higher risk, dropped in value: of small equity share pension funds — by 0.01 per cent, medium equity share pension funds — 0.02 per cent, equity pension funds — 1.32 per cent. As a result, the average change in the unit value of all pension funds was –0.1 per cent.
In the first half of 2016, Sodra transferred to pension funds EUR 75.43 million, another EUR 28.98 million were transferred by participants themselves, while the amount of additional contributions financed from the State budget totalled EUR 31.55 million. As of 2016, contributions to pension funds increased: the contribution of those who have chosen maximum accumulation and of new participants joining currently consists of a 2 per cent contribution from Sodra, additional contribution amounting to 2 per cent of the participant's income, and an additional contribution from the State budget amounting to 2 per cent of the average monthly wage in the country.
As of 30 June 2016, 21 2nd pillar pension funds operated in Lithuania, with 1.24 million participants accumulating their pension in them.
The investment units of 3rd pillar pension funds decreased by an average 0.02 per cent in value in the first half of 2016; however, as participant contributions have increased, the net assets managed by these funds grew by EUR 3.6 million in value (to EUR 66.11 million). At the end of the first half-year, 12 3rd pillar pension funds, with 48.95 thousand participants accumulating their additional pension in them, operated in Lithuania. In the first half of 2016, the return of 5 3rd pillar pension funds was positive, of 7 — negative.