Financial Services, Funds, Investments, Latvia, Pensioners

International Internet Magazine. Baltic States news & analytics Tuesday, 23.10.2018, 06:45

Capital accumulated in government-funded pension scheme grows by EUR 13.5% in January-September

BC, Riga, 07.12.2017.Print version
In the first nine months of 2017, the capital accumulated in the government-funded or second-pillar pension scheme in Latvia grew by EUR 372.28 million, or 13.5%, to EUR 3.136 billion at the end of September 2017, the Finance and Capital Market Commission (FCMC) said, cites LETA.

FCMC representative Agnese Licite informed that all active and balanced pension plans were profitable in the nine months of 2017, with the yield of the active plans ranging between 2.3% and 10.1%, and the yield of the balance plans ranging between 1% and 6.6%. The earning capacity of conservative plans remained limited amid low interest rates and their yield ranged from -0.6% to 2.9%.


At the end of September, debt securities accounted for 46.3% of the pension scheme's investment portfolio and investments in certificates of deposit made up 42.2% of all investments. Of the investments made in certificates of deposit 51 focused on investments in stocks or equity funds and 43% on fixed-income instruments. With interest rates remaining low and pension fund managers seeing potentially more profitable investment opportunities, the share of term deposits dropped to 2.5% of the portfolio.


Nearly all investments, or 95%, were made in countries of the European Economic Area.


Investments made in Latvia contracted by 9.8% from the end of 2016 to EUR 862.247 million, or 27.4%, at the end of September. Of this amount, EUR 445.5 million were invested in government securities, EUR 98.4 million in securities issued by commercial enterprises, EUR 4 million in company shares, EUR 28.3 million in investment funds, EUR 8.1 million in the Latvian venture capital market and EUR 277.9 million were placed with credit institutions.


At the end of September 2017, the government-funded or second-pillar pension scheme had 1.268 million participants. For 64% of them joining the pension plans had been mandatory.


Latvia has a three-pillar pension system. The first- pillar pensions are paid to the existing pensioners from the social contributions made to the state budget. The second or government-funded pension level implies that part of the social contributions is invested in the finance sector, ensuring bigger pensions in the future. The third pillar is operated by private pension funds based on voluntary contributions.

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