BELGIUM- Belgium’s pension funds returned –5.1% in 2001 according to the annual figures released by the country’s pension fund association (BAPF). The drop outstrips 2000’s performance of –0.07% and the 1999 equivalent of 15.3%.
Over a longer horizon, however, Belgian funds have performed better with five and ten-year figures of over 8%. The latest survey covers 114 funds representing a combined e8.9bn, or 85% of the total sector assets.
The share of equities held by Belgian funds dropped marginally from almost 50% in 2000, to 48.2% at the end of last year. The BAPF says this is due to both a fall in equity prices and a conscious, albeit small, rebalancing by the funds.
Eurozone equities account for 55% of equity investments but the Association says there has been a significant diversification by larger schemes into North America (22.2%) and to non-euro European countries (12.7%).
Fixed income holdings account, on average, for 40% of pension fund assets, largely unchanged in the past four years. Of the funds allocated to fixed income, 90% are invested in the eurozone, 6% in the US and the remnants elsewhere.
Poor markets and deflated asset values have eaten into funding ratios at Belgium’s funds. At the end of 2000, funding was an average 162%, a level that has dropped to 145% in twelve months.
Thanks to tax incentives, Belgian funds continue to invest a hefty 70% in UCITS- 65% for equities and 86% for fixed income. “Pension funds are the only institutions of the sector of complimentary pension that still have to pay non-recoverable withholding tax on investment income. A UCIT investment allows the fund to avoid this tax ,” says the BAPF.
Despite losing over 5% in 2001, Belgium’s funds fared better than some of their counterparts. UK funds suffered their second consecutive year of negative returns in 2001 with a median return of -9.7%, the worst year since 1990 when they fell 10.2%.