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Special Report

Impact investing


Portugal returns 7.4% for 2003

Pension funds in Portugal returned a median 7.4% in 2003, according to consulting firm Watson Wyatt. The data comes as the International Monetary Fund called for an increase in the retirement age and a cut in indexation.
“Thus, on average, larger funds outperformed smaller funds,” the firm said. It added that higher risk funds – those with higher equity allocations - attained the best relative performance at a median 2.9% and 3.5% on a weighted average.
Meanwhile, the IMF said “reforms of ageing-related spending would be critical to secure fiscal sustainability – but little progress was likely in this area in the near term”. The fund, in a report on Portugal, called for “early progress, possibly with a combination of reforms, including an increase in retirement ages mirroring increases in life expectancy, a cut in effective indexation, and a reduction of the large tax exemptions for retirees”. But Portuguese authorities said that reform could be “counterproductive”.
“The authorities stressed that their efforts were focused on reducing the fiscal deficit in coming years, and that opening up a politically costly dispute over pensions could prove counterproductive,” the IMF said. The report also said the Portugal’s economic growth benefit in part from the takeover of the postal pension fund – as well as asset sales and the securitisation of tax and social security arrears.

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