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Danish, Dutch pensions boast best inflation-adjusted returns since 2008

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Danish and Dutch pension systems have achieved the strongest returns, adjusted for inflation, since the onset of the financial crisis, according to OECD calculations.

The majority of OECD countries saw pension funds post positive returns last year, rebounding after nearly two-thirds suffered losses in 2011.

According to the latest ’Pension Markets in Focus’ report, pension funds in the 34 OECD countries posted an average return of 5% last year and saw their assets continue to grow, at the end of 2012 accounting for 28% of all institutional holdings across the member states.

The report also noted that assets under management at pension funds had risen twice as strongly – by 7.4% since 2009 – than the 3.8% and 3.4% growth seen by the funds industry and insurance industry, respectively, in OECD nations.

The report said that, despite continuing uncertainties in the world economy, pension funds averaged 5% investment returns in 2012, a marked improvement over the 2011 results when 21 member states saw their pension funds post losses.

“Of these 21 countries, 19 experienced positive returns in 2012,” the report adds. “The UK and US had better returns in 2012, though still negative.”

In the Netherlands, where pension assets account for 160% of local GPD, its pension industry saw the highest overall returns of all countries examined, seeing assets return 13.5%.

On a ranking of European countries, Belgium came second behind its neighbour, due to pension assets returning 9.3%, followed by 7.9% returns by the Swedish system – with 7.5% and 7.1% from Switzerland and Iceland, respectively.

“Sixteen further OECD countries saw real investment rates of returns between 2% and 7%,” the report adds. “The simple average improved by 6.7 percentage points, from -1.8% in 2011 to 4.9% in 2012.”

The report also found that, since 2008, 16 member states saw nominal annual rates of return exceed 2%.

“Turkey and Denmark came through the global instability with the best results in nominal terms, with a return equal to 11.6% and 8.5%, respectively,” it says.

“However, after taking into account inflation, Denmark and the Netherlands are the two countries that performed the best over the period, with a real return equal to 6.1% and 3.5%, respectively.”

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