The stock exchange collapse significantly hurt the performance of privately-managed pension funds and the inflation erased yields.
Privately-managed pension funds (2nd pillar) last year reported four times lower yields than in 2010 and the weighted average yield on net assets (one of the leading indicators of pension fund performance) fell below the inflation rate.
The net asset value per unit (NAVPU) of mandatory private pension funds went up by 3.1% on average over the course of last year, while the inflation rate was 3.4% in November. The growth rate of the NAVPU indicator fell five times from 15% in 2010.
For comparison, the average annual interest rate on household deposits denominated in lei was 6.9% over 2011.
Pension funds keep around 10% of their assets in bank deposits, while the bulk of money is invested in government bonds.
10% of funds are invested in stocks, but the bourse declines in the second half of the year had a strong impact on the profitability of pension funds.
“Pension funds, with a few exceptions, had exposure to capital markets. The bourses started to fall significantly since mid-2011, so the impact on pension fund performance has been huge, even amid a stock exposure of just 10%-15% of the overall assets,” says Horia Braun, investment manager of ING Pensii.
ING manages the largest mandatory private pension fund with RON2.5 billion in assets. But the fund managed by ING had the lowest growth rate of the net asset value per unit last year, of 1.95%.
The biggest rise was recorded by UK’s Aviva, with a rise of nearly 5% of the net asset value per unit, followed by Allianz-Tiriac, Eureko, BCR Pensii, and Generali, with increases of around 4%.
(English version by Daniela Stoican)