Market data for the first half of the year show positive growth in the pension fund portfolios. Total assets of Level 2 pensions have increased by 8.9 % or EUR 178.5 million amounting to EUR 2.2 billion, whereas assets of Level 3 pensions have increased by EUR 25.1 million or 9 %. The largest increase is observed with respect to Nordea pension plan assets.
The total pension portfolio managed by Nordea has increased by 16 % amounting to EUR 113 million. As compared to the same period during the previous year, the most rapid increase for Level 2 plans was observed for Nordea active investment plan assets – by 18 %, amounting to EUR 78.1 million. On average, each participant in a Nordea investment plan has accumulated EUR 3,500 which is double the amount of the average savings of Level 2 pensions, i.e. EUR 1,800.
In Level 3 pensions too, Nordea pension plans have had the most rapid growth — Nordea balanced pension plan assets have increased by 30 % amounting to EUR 6.9 million, whereas the Nordea progressive pension plan has grown by 32 % and, at the end of June, its assets amounted to EUR 4 million.
The total pension capital has increased in terms of both the investment profit and newly-made contributions. In terms of profitability, active and balanced pension plans have performed particularly well; they have made their participants from 1.7 to 7.8 % over a period of six months. The semi-annual performance of conservative plans has been more moderate — from 0 to 1.7 %.
“While these results may be deemed to be rather positive, the trend of the bonds markets has to be taken into account, i.e. with the increase of interest rates in the second quarter of the year, the value of bonds decreased. On the European level, such developments were largely stimulated by the situation in Greece. However, it is not impossible that after the agreement between Greece and international lenders the trend of bonds decreasing in value will also continue over the second half of the year. Therefore, customers holding conservative plans might have to accept a rather modest pension plan profitability, something around zero. Regardless of these short-term fluctuations, it is forecast that, in the future, bonds might become more profitable to our customers, therefore whatever is not earned today will be earned tomorrow,” explains Iļja Arefjevs, Member of the Board, Nordea Pensions Latvia.
At the moment, Nordea Bank AB Latvia branch is the only branch of a foreign bank in Latvia offering full services, which since 2009 operates together with a pension management and administration company Nordea Pensions Latvia and Nordea Latvia Open Pension Fund. These companies belong to the leading Scandinavian life and pension insurance group Nordea Life and Pensions which manages assets worth EUR 67 billion.