Tuesday, September 13, 2016

Pension Plan performance world wide is good

There are many who want to take away pensions and some cite poor performance as one of the reasons to allow the individuals to run their own plans. However when we look at the performance of Pension Funds Positive investment returns in 2014 and also over the last 5 and 10 years we can see that the growth of pension fund assets in 2014 was underpinned by positive investment returns. 

All the reporting OECD countries recorded positive real net 3 investment returns in 2014, ranging from 1.2% in the Czech Republic to 16.7% in Denmark, with an OECD weighted average of 5.0% (Figure 7).

The simple average is higher, at 6.8%. Twenty-one OECD countries experienced real returns higher than 5%. Outside the OECD area, the performance of pension funds in terms of real net investment returns was also positive, but returns were lower than in the OECD area on average: 1.2% for the weighted average and 4.6% for the simple average (Figure 8). 

India experienced the highest level of investment returns among non-OECD countries at 19.1%. Only four non-OECD jurisdictions had real negative investment returns in 2014: Armenia (-1.7%), Nigeria (-1.7%), Hong Kong (China) (-3.2%) and the Russian Federation (-7.4%). The existence of management costs reduces nominal returns which combined with high inflation may lead to negative real return

Figure 7. Pension funds' real net rate of return on investment in selected OECD countries, Dec 2013 - Dec 2014 In per cent Figure 8. Pension funds' real net rate of return on investment in selected non-OECD countries, Dec 2013 - Dec 2014 In per cent. Source: OECD Global Pension Statistics.

The results are positive and even more so when they are compared to real growth rates in these countries. (same source)

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