ICELAND - The Pension Fund for State Employees (LSR) , the largest pension fund in Iceland, alongside the pension fund for nurses (LH) collectively produced a net real return of -25.2% in 2008.
Figures from the scheme’s consolidated statement for 2008 showed at the end of the year the scheme - including the LH - had total assets of ISK323.1bn (€1.8bn).
Over the year, the LSR scheme in total increased its allocation to domestic bonds from 52.7% in 2007 to 58.5%, or ISK 189bn, while foreign bond investment dropped from 2.6% to 1.5%, or ISK4.7bn a year later.
However, the biggest movement was in domestic equities which dropped from an allocation of 15.9% at the end of 2007 to just 1%, or ISK 3.1bn in 2008, while investments in foreign equities increased from 27% to 29.9%, or ISK 96.5bn.
LSR, which is divided into separate sections, reported a nominal yield of -13% overall for the year, although the net real yield was -25.2%, while the LH fund - which shares staff and facilities with the LSR - had a nominal return of -14.6% and a net real return of -26.6%.
The LSR comprises the fully-funded Division A - which includes public and municipal employees such as teachers, healthcare staff and police officers and new members - while Division B and the pension fund for nurses (LH), an older system which closed to new members in 1996, is partially based on funding from accumulated contributions and in part from supplemental contributions from public sources.
The total membership of the funds was 31,984 active members in 2008, with 14,482 members receiving pensions and other benefits, while total net investments at the end of the year amounted to ISK 21bn, of which ISK3.7bn was in private equity and ISK500m was in real estate.
The real return on the asset classes in the LSR section comprised -6.3% on domestic bonds, 11.4% on foreign bonds, but a whopping -97.8% return on domestic equities, along with a yield of -23.8% on foreign equities, but a positive result of 50.9% on other investments.
Meanwhile, the real returns on LH assets in 2008 was -6% on domestic bonds, 5.9% on foreign bonds, -96.3% on domestic equities, -25.4% on foreign equities and again a positive yield of 51.8% on its other investments.
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