Good Year for Croatia’s Pension Funds

Total Croatia News

Pension funds have mostly achieved yields between 6 and 13.5 percent.

Managers of obligatory pension funds in Croatia say they are satisfied with the yields achieved in 2016, which mostly range between 6 and 13.5 percent. The best yields were achieved by the A category funds, which are those which mainly invest in shares, reports Večernji List on December 31, 2016.

Somewhat weaker results were for the category B funds, which invest in both stocks and safer securities such as bonds. There, the yields ranged from about six to eight percent. In the most secure C category, yields were at similar levels, between 7 and 8.5 percent.

The reason for the good results is a relatively good situation in the stock markets, which means, according to numerous analysts, that it was not too difficult to achieve positive results. Actually, given the circumstances, perhaps the funds should have achieved even better results. According to some calculations, the funds had a chance to realize yields of up to 15 percent. However, future retirees can be happy with their yields this year, especially since interest rates in banks were low and Croatia this year had a general deflation.

One of the problems is the lack of education for current workers and future pensioners, since many of them fail to actively choose a category and therefore are automatically included into the B category, which includes as much as 98 percent of future retirees. If some of them had the encourage to move to A category funds, they would have had better yields this year, due to the growth of the stock exchange.

The categories were introduced two years ago, which has enabled employees to have a choice, depending on the degree of risk acceptable to them. Those who are willing to take a risk in order to have the possibility of achieving higher yields can choose A category, while C category is for those who do not want to accept any risk and who have just a few years left before retirement.

In the B category, funds had an average yield of 6.5 percent. The most successful was Erste Plavi with the yield of 8.1 percent, while the worst was AZ Fund with the yield of 5.85 percent. Erste Plavi was also leader in the A category, bringing to its members the yield of 13.5 percent, as well as in the C category, with the yield of 8.5 percent.

In late November, four pension funds managed assets worth a total of 82.7 billion kuna. Almost 60 billion kuna, which is about 70 percent, was invested in government bonds, while 10.3 billion kuna was invested in stocks of Croatian companies. Fund managers say they would like to invest more in local stocks, but there are not many opportunities for that. Currently, the best option is the tourism sector.


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