Pension Funds Earn More than 5 Billion Kuna in 2017

Total Croatia News

Good news for members of mandatory pension funds.

Mandatory pension funds (OMF), which manage assets worth more than 84 billion kuna, last year earned to its members more than 5 billion kuna, announced on Wednesday the Association of Pension Funds, reports on February 1, 2017.

“Last year was yet another successful one for OMFs, with very high yields of 6.94 percent in B category funds which have 98 percent of all members, with 7.43 percent in C category and 11.8 percent in A category funds”, said president of the Association and CEO of Allianz ZB Mandatory Pension Fund Dinko Novoselec. He added that last year’s yields were well above the long-term expectations and projections, especially since they were achieved in an environment of low inflation and interest rates.

Last year, said Novoselec, OMFs increased their stakes in a number of companies, such as Arenaturist, Adris Group, Atlantic, Končar, Podravka and HT, and also participated in the privatization of Imperial from Rab and recapitalization of HTP Korčula, Ilirija and the Zagreb Stock Exchange.

Since OMPs will soon mark 15 years of operations in Croatia, Novoselec noted that the average annual yield of all B category pension funds in these 15 years was 5.95 percent, and in categories A and C, which were introduced two years ago, 10.86 percent for A category and 7.29 percent for C category.

Based on the good results in the last 15 years, assets on the personal accounts of members of mandatory pension funds of all categories has been increased by more than 30 billion kuna, while the average balance in the personal account of a fund member who has been a member since 2002 is currently more than 130,000 kuna. Those who invested 100 kuna in 2002, with the aforementioned average annual yield, now have 240 kuna.

Last year, the funds mostly invested in Croatian government bonds, which was primarily due to the inability to investment elsewhere. Novoselec said that the investment strategy in the following years will have to adapt to new circumstances, and added that pension funds now more than ever need domestic investments which are not government bonds and which would be low risk and provide yields higher than government bonds.

“Pension funds continue to be interested in large infrastructure projects, such as investing in ports, airports, energy projects, railways, and we support the idea of IPO of Croatian Electric Company. We still believe that investing in Croatian Motorways public company would be appropriate for pension funds and would represent a solution for a significant reduction in public debt”, concluded Novoselec.


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