Funded pensions

Pension fund assets struggle to return to pre-crisis levels

 

 

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Pension Markets in Focus 

13/07/2010 - While pension funds have strengthened with the financial market rebound, OECD data show that pension fund assets in most countries have yet to recover to pre-crisis levels. Public pension reserve funds, however, have now fully made up for their crisis-related losses due to more conservative investment strategies, according to the OECD Pensions Markets in Focus.

 

Other highlights from this edition:

  • Thanks to the rebound in equity prices that started in March 2009, the total amount of pension fund assets in OECD countries recovered around USD 1.5 trillion of the USD 3.5 trillion in market value that they lost in 2008. Despite this recovery, total asset values in the OECD area were still 9% below the December 2007 levels on average. Some countries however already recuperated completely from the 2008 losses. This is the case for Austria, Chile, Hungary, Iceland, New Zealand, Norway, and Poland.
     
  • The OECD weighted average asset-to-GDP ratio for pension funds increased from 60.3% of GDP in 2008 to 67.1% of GDP in 2009, with the Netherlands improving by a record 17.1pp jump in the value of its assets in the last year, equivalent to a gain of USD 48billion, from USD 979 billion to over USD 1 028 billion.
     
  • Despite these positive outcomes, funding levels for pension funds were still significantly lower at the end of 2009 than two years previously. The median funding deficit (the gap between assets and liabilities) was 26 per cent at the end of last year, compared with 23 per cent a year earlier and 13 per cent in 2007. Decreasing bond yields (which are used to calculate liabilities) in many countries meant that liabilities went up, offsetting the investment recovery.
     
  • While public pension reserve funds (PPRFs) in some countries were hit badly by the financial crisis during 2008, they experienced a strong recovery in performance in 2009, which largely made up for the losses suffered in the previous year. By the end of 2009, the total amount of PPRF assets was equivalent to USD 4.5 trillion, on average 7.3% higher than at the end of 2008, and 13.9% higher than in December 2007.

For comment or further information on this publication, please contact Jean-Marc Salou (tel. +33 1 45 24 9110) from the Financial Affairs Division.
 

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