Romanian pension funds returned 11% in the first 8 months of 2009
All the private pension funds in Romania posted remarkable returns for the first 8 months of 2009, proving their prudent approach to the crisis does pay off, data published today by the Romanian Pension Funds' Association (APAPR) show.
The 12 mandatory pension funds (2nd pillar) posted a net weighted average return of 11.31% for the first 8 months of 2009 and a 15.53% return for the last 12 months, ended August 2009. Net assets under management went up to EUR 476mn in the first 16 months after the inception of the system (May 2008). Total number of plan members reached 4.82mn, out of which 4.42mn are active participants (the remainder being inactive accounts). The funds are currently invested very conservatively, with the majority of assets in state securities, bonds (municipal, corporate, etc.) and money market instruments. Equity exposure currently stands at about 5%-6%, compared to 10% in May 2008 and 1.2% in February 2009.
The 13 voluntary pension funds (3rd pillar) posted a net weighted average return of 10.73% for the first 8 months of 2009 and a 10.65% return for the last 12 months, ended August 2009. Net assets under management went up to over EUR 38mn in the first 28 months after the inception of the system (May 2007). Total number of plan members reached 175,000. These funds are also conservative, but more equity-inclined (~10%) compared to mandatory funds.
((For comparison reasons: The official inflation rate in Romania was 3% for the 8 months ended August 2009 and 5% for the 12 months ended August 2009. In the last 12 months (Aug 08 - Aug 09), Romanian state bonds offered a net return of ~11.7%, municipal bonds offered a net return of 14.2%, corporate bonds returned 8.8% and bonds issued by EBRD, IBRD, EIB returned 8.6%. Also, interest rates for RON deposits averaged at ~13.5%.))
"Returns posted by all the Romanian private pension funds proved out to be remarkable and the conservative approach paid off. All in all, we can now say our industry kicked off with outstanding results. We managed to escape the crisis unharmed by the global fall in equity markets, but we entered those markets just in time to benefit from the rally in the last few months. Our only drawback is the very low level of contributions - only 2% for the mandatory funds, for example. It's a shame that the industry managed to perform admirably in terms of returns, and we put those returns on top of so small contributions directed to the system", Mr. Crinu Andanut, Chairman of APAPR, comments on the results. Romania has the lowest level of contributions directed to 2nd pillar funds, out of all CEE countries - only 2%, with intention to raise this by 0.5pp a year, to 6% in 2016.