The OEGO pension fund returned 7% over 2014, falling below the average for Belgian pension funds but increasing assets under management to more than €1bn.

The multi-employer pension scheme manages first-pillar benefits for municipal authorities and second-pillar pensions for public bodies and private sector companies.

The pension fund’s returns have now fallen two years consecutively after returning 7.4% in 2013 and 9.2% in 2012.

Belgian pension schemes saw average returns of 11.86%, almost double returns for the year previous, according to figures from the Belgian Association of Pension Institutions (BAPI).

On the back of 2014’s results, OGEO’s AUM now stands at €1.1bn, making it the fifth-largest fund in Belgium.

The pension fund was launched in 2007.

According to its annual report, the scheme shifted its real estate, European medium-term notes (EMTNs) and insurance assets in-house after setting up an independent investment vehicle.

The scheme also has mandates with Banque Degroof, Candriam, Crédit Agricole and KBC Asset Management.

It currently invests 20% of its assets in real estate, which it said should provide a medium-term return of 5%, focusing mainly on commercial assets with long-term clients and links to inflation.

Over the course of 2014, the scheme placed the majority of its assets in fixed income instruments, including government bonds (25%), corporate bonds (20%), emerging market and high-yield bonds (5%) and EMTNs (2.5%).

It held 22.5% of its assets in equities, with 5% in insurance products.

Stéphane Moreau, managing director, said the scheme’s reserve capital of €573m put it in a good position to provide pension commitments.

“These results are a product of a policy focused on the performance and diversification of our investments that prioritises a long-term approach,” he said. 

“The OGEO property portfolio sets itself apart from the majority of other Belgian pension funds, which rarely invest in ‘bricks and mortar’.”

Emmanuel Lejeune, a member of the executive committee, said the creation of the investment vehicle had allowed the quality of reporting in the scheme to improve and gain greater control over its external asset managers.

In 2014, BAPI celebrated second-pillar pension fund membership exceeding that of the third pillar, after the government legislated for the formation of industry-wide schemes in 2004.