Lithuania’s voluntary second-pillar funds returned a nominal average of 4.37% in 2016 compared with 3.61% a year earlier, according to pensions regulator Bank of Lithuania.

Although all 21 plans generated positive results, these ranged from 11.25% to 0.39% depending on the equity and bond allocations, while inflation that year averaged 0.9%.

The four highest-risk funds, which can invest up to 100% in equities, delivered by far the best return and best year-on-year improvement, of 9.2%, compared with 6.64% in 2015.

In the case of the seven medium-risk funds, with an equity allocation of 50-70%, the return increased from 3.63% to 4.66%.

These are by far the most popular choice, accounting for just over half of assets and membership.

In contrast, the return of four low-risk funds (25-35% equity) fell from 3.08% to 2.48%, and that of the six conservative bond funds from 1.24% to 0.79%, reflecting the low interest rates.

Membership grew over the year by 3.4% to 1.25m, and assets by 17.4% to €2.5bn.

Investment activities accounted for €79m of the increase in assets, and the base contribution, levied at 2%, a further €153m, the latter boosted by last year’s strong wage growth.

In 2016, both the additional employee and state budget contribution rates doubled to 2%, raising accumulated assets by €67m and €70m, respectively.

In the smaller third pillar, all the funds likewise produced positive results, while the average return increased from 3.62% to 4.9%.

The returns of the five high-equity funds rose from 4.85% to 7.72%, those of the four medium-risk plans from 3.33% to 3.55%, and those of the conservative funds from 1.66% to 2.48%.

Membership rose by 9% to 51,600, and assets by 29.4% to €79.5m.

This year, the pension system is to be reformed as part of the agenda of the Lithuanian Peasants and Greens Union, the centre-left party that now leads the coalition government following last year’s general election.

One issue under discussion is that those workers whose second-pillar pension funds would be insufficient to purchase an annuity on retirement are moved back fully into the first pillar.