Poland’s 11 second-pillar pension funds (OFEs) lost money across the board in the 12 months to the end of September, according to the Polish Financial Supervision Authority (KNF).

The weighted 12-month average plunged to a 6% loss, compared to a 27.8% gain a year earlier and 1.5% at the end of the March.

Results ranged from -4.4% (Allianz Polska) to -7.4% for Pekao, which has since been taken over by PZU Złota Jesień.

Longer-term results were also affected, with the three-year average return falling from 19.1% to 18.8%. Five-year returns collapsed from 42% in the period to September 2017 to 19.7% in the five years to September 2018.

The OFEs’ heavy weighting in domestic equities – 78.5% in September, according to the Polish brokerage house Trigon – tied the funds’ performance largely to that of the Warsaw Stock Exchange.

Despite Poland’s strong economic fundamentals – the IMF forecasts GDP growth of 4.5% year-on-year in 2018 and 3.5% in 2019 – as of end September the exchange’s benchmark WIG index had fallen 8.3% year on year.

Since January, Polish share prices have been dragged down by emerging market factors such as strengthening US dollar, regional concerns over a no-deal Brexit, the budgetary square-off between Italy and the EU, and Poland’s own disputes with the EU, notably over judiciary independence.

More recent positive events, such asFTSE Russell’s upgrade of Poland from emerging to developed market status in September, and S&P’s credit-rating upgrade from BBB+ to A- the following month, have yet to arrest the slide in equity prices, with the WIG falling 7.5% in October.

The losses have contributed to the decline in the net asset value of OFE portfolios. As of the end of September these totalled PLN164.1bn (€38.2bn), a year-on-year fall of 9.4% in Polish zloty terms.

Other factors include the continuing outflow of assets under the slider regime for members with 10 or fewer years left to retirement: PLN6.2bn exited this way in the first nine months of the year according to Trigon, against PLN2.4bn of contribution inflows.

There has also been no legislative action on the future of the OFEs as the government has focused its attentions on launching the auto-enrolled employee pension plans (PPKs) in 2019.

These were approved by last month by both houses of parliament.