Assets of private pension system grow by 6.8% in 2022

Assets of the private pension system in 2022 grew by UAH 263.2 million, or by 6.8%, to 4.14 billion, but the number of private pension funds fell from 64 to 55, the ICU investment group reported on its Telegram channel on Friday.

"The war hit the Ukrainian financial sector hard, and private pension funds were no exception. Inflation, devaluation, growth of the key policy rate, revaluation of government bonds, low deposit rates, alienation of shares of some Ukrainian companies, falling global indices – it is not a complete list of challenges, faced by Ukrainian pension funds in the first year of the war," ICU, which is a major player in the market, said.

Hryhoriy Ovcharenko, Asset Management Director of the ICU Group, said that 34 private pension funds achieved positive returns, including eight of them that exceeded the average annual rate of return on annual deposits (9.75%) but expectedly none exceeded inflation, which was 26.6%.

Among other problems, he named the devaluation of the hryvnia against the U.S. dollar by 34%, the fall of the S&P 500 index by 19.4%, as well as the alienation of shares of Ukrnafta and Motor Sich popular on the market in favor of the state. Ovcharenko said that these securities were in the portfolios of 23 out of 57 private pension funds.

At the same time, he said that issuers of corporate bonds this time behaved much more responsibly, in particular, the issues of municipal bonds of the cities of Kharkiv and Lviv were repaid in full, and the companies Ukrposhta, Nova Pochta, RUSH, Alfa-Leasing, Maneveo, S.S. Loan also redeemed or fully redeemed their bonds.

ICU said that the crisis year underlined the effectiveness of the conservative strategies of the best Ukrainian private pension funds.

"Although they failed to overcome the sudden super-high military inflation, but, over the spans of 5+ years, top private pension funds manage to save money from inflation," Ovcharenko said.

According to him, the average profitability of private pension fund Dynasty under the management of ICU for the last three years was 9.5% per annum, for five years – 11.84%, for 10 – 19.44%, while inflation, respectively, was 13.49%, 10.81% and 14.4%.

According to the National Securities and Stock Market Commission, the weighted average growth in the net value of pension assets in 2022 was 5.68%, and taking into account the NBU corporate pension fund it was 7.35%.

Source: www.en.interfax.com.ua