BELGIUM - Pension funds lost an average of 15.5% over the year up to September, and shifted allocations from equities to bonds, research by Mercer reveals.
Equities lost 27.2% over the year to date and 10.8% in Q3, while bonds delivered 0.3% return over the year and property fell 19.6% in the 9 months to September.
Thierry Laloux, retirement business leader with Mercer in Belgium, commented: "Those recent developments demonstrate the appropriateness of the new minimum funding requirements that are leading pension funds to build up sufficient reserve to amortize the impact of poor performance when they occur.
"Nevertheless, many employers will have to inject cash into their pension funds. The situation should also remind employers who moved to defined contribution approach about their responsibility to contribute a sufficient level of contribution to provide a reasonable level of retirement benefit to their employees and to provide adequate information to their employees about the impact of financial returns on their benefit entitlements".
The survey, which looked at 90 of the country's 150 active plans, also found pension scheme investments had switched about 5% of their portfolios out of equities and into fixed interest.
It showed the average fund at the end of 2007 held 50.64% of its overall portfolio in equities and 38.2% in bonds, while at the end of September, these allocations had shifted to 46.1% equities, 46.4% bonds.
Broadly speaking, allocations to other asset classes remained the same. The company said it was too early to tell what the end of year results would be, but warned the effect of the October financial crisis "would not help"
In September, Global Pensions travelled to Belgium (globalpensions.com; September 2008) and found the country's pension system implementing the new OFP reforms while trying to minimise the effects of the credit crunch.
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