The OECD evaluated the Lithuanian pension funds: last year it ranked first in the world in terms of real profitability

According to the report, the OECD released preliminary evaluations for 2019 on Tuesday, in which the leading position went to Lithuania.

According to the OECD, the real return on investment of Lithuanian pension funds last year reached 16.6 percent. Belgium’s pension funds came in second with 15.6% last year, followed by the Netherlands with 13.8% last year. plus. Chile (fourth place) and Denmark (fifth place) were among the five most profitable funds: their real return on investment in 2019 was 11.9%, respectively. and 11.7 percent.

According to the organization’s report, last year the return on investment of pension funds in 2019 was very good: “In 29 of the 46 countries evaluated, the real return on investment of pension funds exceeded 5% , and in 13 it was higher than 10%, including the United States. States (10.1 percent). Pension funds in Lithuania achieved the highest real return on investment in 2019 (16.6%). Overall, pension funds performed well last year in almost all reporting countries. “

The full OECD preliminary report, which assesses the performance of pension funds in 46 countries, is available here.

Tadas Gudaitis, head of the Lithuanian Association of Investment and Pension Funds (LIPFA), says that 2019 was good for everyone due to the good situation in the financial market.

However, according to him, the markets rose in 2019, but even at such a favorable time, not all pension funds performed equally well and there are many reasons for this. An additional challenge for Lithuanian pension funds, which they managed to successfully overcome, was that 2019 started a new business model for them: after the reform of the second pension pillar, they began to function as life cycle funds.

Furthermore, T. Gudaitis points out that the working population in Lithuania and accruing additional pensions in the pension system is relatively younger compared to developed countries in the western world, therefore the total share of equity-focused investments is greater than in those countries without life cycle funds or accumulators have opted for relatively less risky investments. When stock values ​​increase, this has a positive effect, especially for young participants in the system and at the same time allows for greater efficiency and higher returns for the system as a whole.

According to data from the Lithuanian Association of Investment and Pension Funds (LIPFA), from the beginning of the establishment of pension funds operating under the principle of life cycle funds in January 2019 until the end of April, they calculate a positive total of +9.3 percent. Return. As of April 30, the accumulated assets in the population’s pension funds amounted to 3,664 million. euros

The second pillar of the Lithuanian pension that complements the state’s social security system has 1.3 million. participants, represent more than 80%. Lithuanian workers. The pension savings of the country’s population are invested and stored by five pension fund management companies: Aviva Lietuva, INVL Asset Management, Luminor Investicijų Valdymas, SEB Investicijų Valdymas and Swedbank Investicijų Valdymas.