Financial Services, Funds, Investments, Latvia, Pensioners
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Saturday, 20.04.2024, 00:20
Capital accumulated in government-funded pension scheme grows by EUR 13.5% in January-September
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.