02/12/2011
By Ilonka Oudenampsen
Pension funds in Portugal returned an estimated average of -1.5% in November, based on estimates of profitability, lowering the average return of funds this year to -2.4%, Mercer Portugal revealed today.
The average profitability of pension funds was negative due to bad performance of equities and bonds last month. November is the sixth month in 2011 in which the return was negative.
According to Mercer associate Nuno Silva: "Given the global economic situation and no solution to the debt crisis, the bond component of pension funds was penalised by the deterioration of credit quality and general increase in interest rates. The performance of pension funds has been aggravated by the negative performance of equities."
The yield of private debt obligations with AA credit quality and maturity of more than 10 years, the benchmark discount rate for pension funds, was 5.10% at the end of the month, while in late October the rate was 4.62%, Mercer said.
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