Information About Pension Performance
23.08.2011

With the economy still in a state of flux and the world wide economic climate suffering from high inflation and low interest rates, the Organisation for Economic Co-Operation and Development (OECD) found, through the results of their 2010 pension survey, that pension performance continues to be in jeopardy – effecting wealth management planning for many individuals.

The results of the pension survey indicate that while pensions may be slowly recovering in developed nations, due to improvements in investments that are linked to the stock market, it is clear that growth is still being affected by the problems with inflation and interest rates. This means that individuals may need to seek wealth management advice regarding the performance of their pensions, to enable them to accurately understand the effects on their wealth management strategies.

For individuals who have invested in QROPS as part of their wealth management strategy, the average growth rate according to the OECD for the previous year comes in at just 2.7% – a figure that is 1.6% less than the year before. If you have transferred your pension into a QROPS, your wealth management advisor can give you more information about the consequences of this on your pension fund.

Differing Rates of Recovery for Pensions

The recovery rate of pensions differs between jurisdictions – while many markets have made a substantial recovery of previous losses, there are some countries that are still struggling with poor performance. These countries include Ireland, Japan, Spain, Portugal and the USA. Much better performances have been seen for pensions in Canada, Poland, Chile, Finland and also New Zealand.

The pension survey indicates a slight increase in public pension reserve funds and shows that while investment returns were lower in 2010 than the previous year, they are still more positive than previously.

Problems still exist due to lack of confidence in the Eurozone and worldwide fear over the state of the financial marketplace, which makes it difficult to safely predict pension performance and how this impacts on an individual’s wealth management planning. It also seems that individuals with small pension funds are at risk of paying higher operating costs, which in turn increases the damaging effects of inflation and interest rates. Large disparity between administration costs of pension funds can be seen between different jurisdictions – for example administration costs in Denmark and Portugal are just 0.1% of assets held, while this increases to costs equating to 1.4% in the Czech Republic. For less developed nations, this disparity increases even further, with the Ukraine currently seeing the highest of all administration costs at a rate of 5.9% of pension fund assets.

The OECD pension survey also indicates that public pensions have a much better performance rate than private schemes in general.

Wealth Management, Pension and QROPS Advice

Guardian Wealth Management is one of the leading wealth management companies in the world, with highly qualified and experienced advisors working from a variety of locations to offer professional and regulated advice on retirement planning, pensions, QROPS for expats and many other wealth management matters.

If you would like further information about QROPS, please feel free to download our comprehensive guide to QROPS, totally free of charge, or alternatively, you can arrange to speak to a wealth management advisor.