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Pý Last year, 14 out of 34 pension provident funds had a negative return

Pý Last year, 14 out of 34 pension provident funds had a negative return

Updates: 05.01.2022 15:27

Prague – A total of 14 of the 34 participating retirement savings funds had a negative return last year. Inflation was overcome by 13 funds, and the real rise came through dynamic or balanced funds, that is, those that invest in stocks. Those with money in conservative mutual funds or bond funds usually end up in the red. This comes from an analysis of the Pívání.cz portal.

According to the Association of Retirement Companies, 129,000 participants in supplemental retirement savings fund participants increased last year in three quarters, for a total of 1.41 million saved at the end of September. The volume of their contributions increased to 94.6 billion CZK.

Equity funds gained more than ten percent in 2021, with some adding up to a quarter. The winner in 2021 was a stock fund from Uniqa Pension, which had a quarterly appreciation. The four dynamic mutual funds ended up with more than twenty percent. In second place was Conseq Global Equity (23.4 percent), followed by ČSOB Dynamic (22.4 percent) and NN Růstový (21.65 percent).

High interest rates, which the Czech National Bank raised rapidly in the second half of the year, are responsible for losses of conservative investment funds or bond funds. As a result, the value of the previously purchased bonds, which the money received at lower interest rates, decreased.

“Anyone who wanted a higher return in the last year had to risk more due to inflation and invest in equity instruments. For example, the funds focused on government bonds with longer maturities due to higher base rates in the Czech Republic,” investment strategist Jan said. Sušánka from Sušánka & Partners for ČTK today. According to him, the money focused on Asia had the worst return due to the state regulation of some private sectors and because of problems with the real estate company Evergrande.

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The analysis is based on inflation as of November 2021, which was 3.5%, but its trend was growing. Fund returns are adjusted for fees charged by retirement companies to manage money. Yield means more money saved, which pension companies make by investing in stocks or, for example, bonds. All participants’ money increases or decreases with the said estimate, i.e. their own savings, contributions from the state and potential contributions from employers.

New supplemental pension insurance contracts can be entered into until November 30, 2012. As of January 2013, only supplemental pension savings contracts can be entered into. This is different, especially in the need to choose an investment strategy. The new funds no longer guarantee that the potential loss will not reduce the client’s savings, and will not pay off half of the money saved after 15 years. On the contrary, it provides a potentially higher estimate. People have been able to obtain supplemental pension funds with financial support from the state since 1994. Of the 44 funds, nine remain.

Participating pension funds