ROMANIA - Romanian pension plans made the most of gains in the equity markets and bond return potential last year, as figures released by the Romanian Pensions Funds’ Association (APAPR) suggest second pillar mandatory schemes returned an average of 17.7% in 2009.

Data showed the 12 second pillar pension funds delivered between 10.15% and 19.39% net in 2009 - higher than the 11.5 achieved in 2008,thanks to “active management of fixed income investments, a high interest rate environment and efficient equity market timing” according to APAPR.

This was achieved in part by as many pensions funds increased their bond holdings last year, up from an average 42.1% in May 2008 to 62.7% by October 2009. (For more information on Romanian pensions, see IPE’s latest Pensions In update, published this month: Romania: Teething troubles)

Data supplied by APAPR suggested government bonds returned 10-11% in 2009, while the interest rate on deposits was approximately 12-13% and inflation ended the year at 4-5%.

The sum of money held in Romanian second pillar pensions is still relatively small compared with other European countries, at €565m, and unlikely to increase much in the near future, according to the APAPR. Second pillar contributions will rise to 2.5% of participant’s gross income this year, up from 2% in 2009 although this “still lags” behind the 3% expected to be paid by now under the pensions legislation set up with the regime said APAPR.

The OTP fund generated the lowest return of the year at 10.15%m, closely followed by KD at 10.73% while ING - the largest plan in Romania - generated the largest return of 19.39% followed by Prima Pensie at 18%.

Voluntary pension fund investments also fared well although the performance diversity was stark among the third pillar sector’s funds, as voluntary arrangements generated a market average return of 15.88%.

Moderat was the best performing fund of 2009 as it returned 23.24%, followed by AZT Vivace with 19.31%, while at the other end of the table BCR Prudent lived up to its title and generated a lower positive return of 7.57%, followed by OTP Strateg delivered 8.68%.

Crinu Andanut, chairman of APAPR, noted the small sums of money being invested in Romania should continue to assist investment managers as their size should allow them to quickly tap opportunities.

“Our pensions funds’ results remained strong during this troubling year, as managed achieved a fine risk-return balance when investing the still very low level of assets. Romanian pension funds weathered the storm in solid positive territory and look forward to the no-less challenging markets of 2010, for which expectations are still mixed between extremes,” said Andanut.

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