Belgium’s second pillar pension funds saw an average return of 1.4% last year, says the Belgian Association of Pension Funds (BVPI).The return is considerably lower than the 9.25% return in 2006 and the 14.96% the year before. It is the first year since 2002 that the Belgian funds have recorded a return lower than 8%.
However, the association today contrasted the 2007 result against the average return of 7.66% in the period between 1985 and 2007, and a real return after inflation of 5.5%.
“In a historical perspective this are very high real return,” said Philip Neyt, chairman of the BVPI.
According to Neyt, long-term returns are the results of good diversification and a stable and prudent investment policy.
“The funds are not looking for fashion trends and they mostly want transparent investments. Also, they are not affected by the currently disliked collateralised debt obligations (CDOs)," said Neyt.
Last August, Belgian pension funds recorded an average return of almost 4% in the month to 30 June , although schemes were hit by the market turbulence in July and August. (See earlier article: ‘Subprime halves Belgian returns’).
The study found that schemes had lost around half of their the returns made in the first six months of 2007.
Despite describing the direct impact of the event as “not important”, the BVPI said at the time: “The most important impact of this crisis for IBPs [Belgian pension funds] is the contamination effect which the crisis had on the equity markets, in particular on the financial sector and on the extension of spreads on the bond market.”
The organisation added: “During our survey, this contamination effect seemed to have cost half of the returns that were made during the first six months of this year.”