According to data from the Bank of Lithuania (BoL), the sector’s regulator, nominal returns for the voluntary second-pillar funds averaged 3.5% in the fourth quarter and 3.61% for the full year, compared with 7.78% in 2014.
All four classes of second-pillar fund produced 12-month positive returns in 2015.
The four high-risk funds, with up to 100% invested in equities, generated the best average result, of 6.64%, followed by the seven medium-risk funds (with equity limits of 50-70%) at 3.63%, the four low-risk funds with 25-30% equity investment at 3.08% and the six conservative bond funds at 1.24%.
Since the end of 2014, the numbers of second-pillar providers has shrunk from eight to six, and the number of funds from 26 to 21 following DNB’s takeover of two funds earlier run by ERGO, and subsequently INVL Asset Management consolidating and rebranding its MP Pensions Baltic and Finasta funds.
Over the year, membership of the second pillar grew by 4.9% to 1.21m and assets by 13.5% to €2.1bn.
Of the €252m asset increase, some €137m came from the 2% base contribution, €46.5m from investment activities, €37m from the additional budget contribution (at 1% of average gross annual wages) and €31.5m from the 1% in members’ additional contributions.
In 2016-19, assets will get a further boost as the additional budget and members’ contributions both rise to 2%.
In the smaller third pillar, returns averaged 4.12% in the fourth quarter and 3.62% for the year, and, as was the case with the second-pillar funds, higher equity levels generated superior returns.
The five high-risk funds averaged 4.85% for 2015 and the four medium-risk ones 3.33%, while the conservative funds returned 1.66%.
There was a wider performance spread than in the second pillar, with two medium-risk funds and one conservative plan generating negative returns.
Membership of the third pillar grew by 18.5% to 47,333, and assets by 7.3% to €61.5m.