2014-02-24
The growing number of pension fund participants indicates the increasing attention of the population towards the accumulation of funds for retirement
The number of people accumulating their pension in 2nd pillar pension funds increased last year by almost 50 thousand and the number of participants reached 1.12 million. In 2013 the growth rate of 3rd pillar pension fund participants reached a record number within the recent eight years, while real estate funds take their place among the largest in Lithuania collective investment undertakings in terms of assets.
“The requirement to choose late last year how to continue to accumulate for retirement led to the population to once again turn to one of the essential elements of personal financial management — funding their retirement. The increasing level of financial awareness is evidenced by a record increase, by almost a fifth, in the number of 3rd pillar pension fund participants engaged in voluntary saving”, says Vilius Šapoka, Director of the Financial Services and Market Supervision Department of the Supervision Service of the Bank of Lithuania.
Individuals with savings in 2nd pillar pension funds until 30 November 2013 had to choose how to continue accumulating — pay additionally from their wages and receive an additional incentive contribution from the State, change nothing, or generally discontinue contribution payments to pension funds. 352.5 thousand participants decided to pay additionally from their wages and get an additional contribution from the State budget, while 24 thousand individuals decided to discontinue their contributions to their pension funds and further accumulate in Sodra.
At the end of 2013, 28 2nd pillar pension funds operated in Lithuania, and 1.12 million people accumulated funds in them. Over the year the number of fund participants grew by 4.61 per cent (49.215 participants). The funds of people accumulating in 2013 grew by LTL 636 million (13.2%), of which LTL 473.96 million was transferred by Sodra, while successful investing activities of the funds resulted in an increase of LTL 162 million. In total, 2nd pillar pension funds at the end of last year accumulated LTL 5.44 billion. Medium equity share pension funds remain most popular; more than half of all pension fund participants had accumulated in them 52 per cent of all pension fund assets. Almost a quarter of all assets is invested in Lithuania, almost the same number is also in funds registered in Luxembourg and managed by leading global managers.
At the end of 2013, 10 supplementary voluntary accumulation 3rd pillar pension funds operated in Lithuania — two new funds were founded and one was liquidated. The number of 3rd pillar pension fund participants increased by a fifth (by 5,622 participants) over the year and amounted to 34,237 in late December. This strong growth in the number of participants was only observed in the first years of pension fund activities (2004–2005). In 2013 the assets managed by 3rd pillar pension funds grew by LTL 21.69 million (19.97%) and stood at LTL 130.35 million at the end of December.
On 31 December 2013 the 10 management companies in the country, supervised by the Bank of Lithuania, had founded 33 collective investment undertakings (CIU). They included 9 equity, 3 debt security, 7 mixed investment, 7 real estate, 5 alternative investment and 2 private capital CIUs. At the end of 2013 the overall value of CIU investment portfolios was LTL 837.95 million, and the number of CIU participants — 17.9 thousand. Its assets over the year grew by almost a third. Equity funds remained most popular — three fourths of all participants invested in them. However, by the value of managed assets, real estate funds were in first place; a third of the whole market (LTL 277.15 million) belonged to them.
The Review of Lithuania’s 2nd and 3rd Pillar Pension Funds and of the Markets of CIU is published on the Bank of Lithuania website.