Pension Funds Survived Agrokor, Assets Increased by 9.5 Percent

The total assets of mandatory pension funds at the end of last year amounted to 91.9 billion kuna, which is 9.5 percent or about 7.7 billion kuna more than at the end of 2016, it was stated on Monday at a press conference of the Association of Pension Fund Management Companies and Pension Insurance Companies (UMFO).

The President of the Association and CEO of Raiffeisen Company for Managing Mandatory and Voluntary Pension Funds, Damir Grbavac, emphasized that the total assets of mandatory pension funds represent 26 percent of the gross domestic product and that, according to the annual increase of 9.5 percent, Croatia is a leader among transition countries.

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“According to OECD research, Croatian pension funds are at the very top of the achieved real returns in European countries and have a higher real average return than most OECD member countries, as well as funds from other countries such as Austria, Belgium, the Netherlands, Canada, or Switzerland,” said Grbavac.

According to him, the past year ended with satisfactory positive returns in the context of market conditions, especially considering that the Agrokor case occurred last year.

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Last year, the return in category A pension funds was 4.57 percent, in category B, where the majority of insured persons are, 3.06 percent, and in category C 6.08 percent. Since the beginning of operations in 2002 until the end of 2017, the average annual return of all mandatory pension funds in category A was 8.95 percent, category B 5.76 percent, and category C 6.93 percent, it was stated at the conference.

Grbavac also pointed out that on the last day of last year, there were 1.84 million members in the mentioned funds, of which 98 percent or 1.81 million were in category B.

“Survived” Agrokor, do not intend to participate in roll-up

He emphasized that since the beginning of operations, pension companies have invested a significant portion of their funds in Croatian companies and that they remain interested in investments in infrastructure projects, as well as in the energy sector, mentioning potential investment in HEP in this context.

The past year, he noted, was marked by the Agrokor case that pension funds survived, which he believes is proof that they are well-managed.

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He stated that the funds do not intend to participate in the roll-up credit mentioned by the Association of Small Shareholders of Agrokor, and that their remaining assets in Agrokor are minor, meaning it will not affect this year’s returns of pension funds.

He is also satisfied with the beginning of raising Croatia’s credit rating to investment grade, adding that the funds continue to invest in government bonds.

He considers the initiation of amendments to the Law on Mandatory Pension Funds to be positive, but on the other hand, he is bothered by the fact that we still have only one pension insurance company.

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He said that last year investments were realized in Arena Pula and in Sunce Holding, while investments in Hotels Makarska and Crikvenica’s Jadran have not yet been realized.

Grbavac notes that last year was the first after the financial crisis in which synchronized global growth was achieved, which, he says, surprised everyone, including central banks, but in Croatia, this positive economic trend has not yet reflected on the stock market. In the near future, he expects stabilization of the domestic capital market.