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Contributions to third level pension fund plans reaches new record high peak

Residents’ interest for pension savings continues increasing – the size of contributions made to different private pension plans in nine months of 2017 reached a new historic peak, according to a report from the Finance and Capital Market Commission.

EUR 44.9 million was transferred to private pension funds, which is 11.7% more than there was in the same period of last year. This includes a 14.1% increase in the number of participants. At the end of September, the planned amount of capital savings reached EUR 410 million, growing 7.7% since the beginning of the year.

It is mentioned in the report that EUR 22.9 million was paid from pension plan capital in nine months of 2017, which is similar to last year’s period. 97% was paid in relation to retirement pensions.

The average profitability of pension funds in nine months of 2017 was 2.3%. For private funds it ranged from -6.7% to +5.7%. Profitability was negative for only two pension plans that use US dollar. Results of those pension plans were affected by the decline of value of US dollar before euro by nearly 11% in the surveyed period, FCMC explains.

It is mentioned in the report that investment fund certificates formed more than half of pension fund’s portfolio: 45% of those certificates focused on deposits in fixed income options and 49% – in shares or share funds. The other half of the portfolio consisted of deposits in other types of securities (36%). Two thirds of those securities were state-released or guaranteed bonds. Deposits and requirements for demand before credit institutions formed 11% of total deposits at the end of September.

The commission reports that the volume of deposits performed in Latvia has declined EUR 8.2 million since the beginning of the year, reaching EUR 100.8 million at the end of September.

It should be said that the total number of pension fund participants has grown by 8.8 thousand or 3.2% in nine months of 2017. The total number was 280,980 or 28.5% of Latvia’s population at the end of September.


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