Lithuanian Pension Funds Have Stellar 2016

Pension fund returns for Lithuania’s voluntary second pillar schemes yielded higher returns in 2016 than they did in 2015 according to the Bank of Lithuania, the pension regulator. The nominal average for 2016 was 4.37 percent, which was a marked improvement on the 3.61 percent recorded the previous year. The 21 plans all had positive results, with the worst performer bringing in 0.39 percent and the top end 11.25 percent. The best performing funds were high-risk schemes, which can invest 100 percent in equities. The gamble paid off, with an average return of 9.2 percent, up from 6.64 percent. It was also the biggest annual improvement for all second pillar funds. Medium risk funds with a maximum equity allocation of 70 percent, also had good and improved returns of 4.66 percent up from 3.63 percent. Over half of the members chose these 11 funds.

The remaining funds performed lower year-on-year. The four low-risk funds with equity distributions of 25 – 35 percent yielded 2.48 percent, down from 2015’s 3.08 percent. The lowest interest rates were from the conservative bonds, which were down from 1.24 percent to 0.79 percent. Assets were up by 17.4 percent to €2.5 billion. This was helped by the 3.4 percent increase in membership to 1.25 million. The returns on investment added €79 million to the assets and €153 million were from the increase in base contributions.

Third pillar funds also had all positive results, and bested the previous year’s performance of 3.62 percent with a return of 4.9 percent. The conservative funds improved from 1.66 percent to 2.48 percent. Medium-risk plans also gained on the previous year, moving from 3.33 percent to 3.55 percent. The five high-equity funds had returns of 7.72 percent, up from 4.85 percent.