22:57 21 October 2020
Post by: WBJ

OFEs with disastrous results for last three years

OFEs with disastrous results for last three years
Source: Pxhere

The average rate of return of open-ended pension funds (OFE) for the last three years (September 2017 to September 2020) was minus 22.8 percent. This means that the funds that many of us save for retirement have lost almost a quarter of our money.

The problem with OFEs is the lack of diversification, i.e. too little independent investments.

Funds under the OFE are investing mainly in two types of assets: in the shares of the largest and most liquid companies on the Warsaw Stock Exchange and in Polish bonds. From the point of view of the global pension fund sector, they are therefore poorly diversified, which means that their rate of return and investment risk largely come from one source, i.e. the WSE. In the period under review, the rate of return on the WIG20 index was minus 33 percent, while the WIG lost approximately 24 percent of the value.

For comparison, the American broad market index – the S&P 500 – gained over 30 percent in the reported period.

In Poland, OFEs will probably be liquidated in 2021, and the remaining funds will be transferred to Individual Retirement Accounts. Their role is to be taken over by Employee Capital Plans (PPK).


s&p 500

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