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Belgian pension returns double – association

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BELGIUM – Average returns for Belgian pension funds over 2005 have almost doubled the sector performance figures for 2004 – largely due to good equity returns, according to a survey by the Belgian Association of Pension Institutions.

The association stated that 2005 marked the third successive year that pension schemes produced excellent results.

The survey – consisting of 36 defined benefit and defined contribution funds amounting to almost €6bn or nearly half of total sector assets – showed an average weighted return of up to 15.1%. Performance in 2004 was pegged at 8.9%.

Association secretary general Hugo Clemeur told IPE the funds represented in the survey constituted “a reasonable cross section” of the industry, ranging from those below €50m to those larger than €200m.

According to the association, a portfolio comprising of roughly 47% equities, 43% bonds and 6% real estate achieved the 15.1% return.

Clemeur stated that out of the remaining 4%, approximately 2% was in liquid assets.

Excellent scheme returns were, in part, attributed to rising stock prices, and therefore increased equity allocation. As a result, equity investment rose to 47% from 44% in 2004.

The association added that scheme performance was closely linked to the amount invested in equities.

“The excellent return suggests a further improvement of funding levels for Belgian DB funds,” said a press statement.

Funding levels were pegged at 137.5% in 2004. Clemeur stated that new funding levels would be established in April/May following actuarial calculations.

A more detailed survey of results, asset allocation and financing levels will be presented at the end of May. Clemeur told IPE that “well over a hundred pension funds” form part of this survey.

According to the association, between 1985 and 2005 pension funds achieved an average annual return of 7.9%, and 7.3% over the 10-year period.

The association represents 100 Belgian pension funds worth a total of €13bn. It’s average first half returns for 2005 hit 8.68%, compared with 8.93% posted for the whole year 2004.

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