BELGIUM - Belgian pension funds delivered median returns of minus 25,2% over the year 2008, according to pension consultant Mercer's Brussels office.

Mercer's Pension Investment Performance Survey (PIPS) is based on an analysis of 89 active funds, which represent 60% of the 150 active funds in Belgium.

Willy Santermans, principal at Mercer in Brussels, said the funds' return had been heavily penalised by the negative performance of the equity markets during the first and the fourth quarter.

Mercer said that over 2008, pension funds broadly maintained their asset allocation, while the percentage invested in equities decreased by 8,65% and the percentage invested in bonds increased by 10,13%.

The major part of the shift is to be explained by the difference in return, so after correcting for such difference, we actually observe a slight shift from bonds and short term to equity, according to Mercer.

Santermans called the performances disappointing, also from a long term perspective.

"The average annual return over the last 5 years was 1,1%, 1,0% over 10 years and 4,0% over 15 years," he said.

"Those recent financial developments demonstrate the appropriateness of enhanced professionalism and governance in the management of pension funds, certainly in the area of investment policy and mandates allocated to the asset managers", commented Thierry Laloux, retirement business leader for the firm.Mercer's research shows worse figures than those of the Belgian Association of Pension Institutions (BVPI), which revealed earlier this month Belgian pension funds suffered a negative return of 20.5% in 2008. See earlier IPE story: Belgian funds return -20.5% in 2008)

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