Soothing on the fall in pension funds: it can still fall, but it must be looked at from a longer perspective

The values ​​of pension funds fall because they are inseparable from the capital markets. These show a decline in stock prices. In turn, some people who were necessarily involved in pension accrual have abandoned it. Representatives of the funds assure that the accumulation pays off in the long run, reports LNK Žinios.

Tadas Peciukevičius, the head of SEB Investicijų Valdymas, says that it is necessary to create a financial pillow for old age. At the same time, he points out that there is no contradiction between the pension paid by Sodra and the pension accumulated in the pension fund.

“It just came to our knowledge at that time. So there is no obligation to participate in it. Citizens are encouraged to do it (accumulate). Here it is like a social agreement. It is very important to emphasize here: whether you continue to contribute or not, or whether you are newly included in the second pension pillar, this will in no way be affected by the so-called “rich” pensions.

It should be remembered that the accumulation at the second level comes from the employee’s salary, ”said T. Peciukevičius.

Asked why not everyone is tempted by the prospect of accumulation, he replied that the pension reform had taken place recently.

“The last pension reform was relatively recently, 3.5 years ago. Therefore, there is not enough time for the dust to settle, let’s say a way for the system to settle, there may be a lack of information that sinks into the debate, although the subject is very pragmatic”, explains the head of SEB Investicijų Valdymas.

He added that the level of savings in Lithuania is far too low, especially when it comes to long-term savings, retirement, and sometimes “people like to think or don’t, because it’s a distant future “.


Soothing on the fall in pension funds: it can still fall, but it must be looked at from a longer perspective

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However, mandatory inclusion in the buildup is also criticized by politicians. Social Democrat Gintautas Paluckas argues that pension funds are simply for-profit businesses.

“There are management fees on your savings, some income tax if the fund makes money, and no guarantees are given to you. “There is no need to be wrong here, there is no is not necessary to create such an illusion,” says the politician.

According to Paluck, the current situation in the markets is risky, but the risk is ultimately borne by the individual.

“Today the stock market is down and if you were to retire, purchase an annuity within the next month or six months, you would see the value of the units accumulated in your fund much lower than a year ago. Who will compensate you for this? Nothing. Therefore, it is not a question of trust here, there is simply no need to live in illusions, ”says G. Paluckas.

T. Peciukevičius admits that there are ups and downs in the financial markets, but you have to look at it from a longer perspective.

“The first thing is the financial markets – they are both up and down. The last few years have been particularly successful. Even in the last three years, on average, pension funds have gained more than 40 % of the total, which is an impressive increase,” says T. Peciukevičius.

According to him, the current situation and its emphasis is a short period out of context.

“It happens, yes, the markets adjust – but if we take a longer period, for example, how long our second pillar private pension system has been in place, that is since 2004, it’s a full 18 years,” he said. only three negative years for pension funds. Only three of them are 18 years old,” he pointed out.

T. Peciukevičius also does not rule out the possibility that the markets will continue to fall, but the end of the year could be successful.

“Maybe they will fall again, maybe at the end of the year they will close with positive returns. It is extremely difficult to predict this in the short term, but it is important to emphasize that at In the long term, historically, and especially based on the experience of Western countries, the earnings of pension funds bring positive returns in the long term,” assured the director of SEB Investicijų Valdymas.

At the same time, he noted that when it comes to asset management fees, it would be difficult to provide another example where an asset management service would be cheaper than in pension funds.

You can watch the LNK video here:

Source: The Delfi

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