BELGIUM - Belgian pension funds generated an average weighted return of 9.5% in 2010 in an environment of low interest rates, down from the 15.7% return a year earlier.

According to a survey by the Belgian Association of Pension Institutions (BAPI/BVPI), which is based on 65% of the market, the average asset allocation stood at 39% equities, 49% bonds, 5% real estate, 3% liquidities, 3% alternatives and 1% reinsurance products at the end of December 2010.

This reflects a 2% rise in equities and a 2% drop in bond exposure on the allocation at the end of June 2010.

Capital previously kept in cash was re-allocated, which is why liquidities fell by 2% over the same period.

The returns of the last two years helped pension funds in Belgium to return to sound, pre-crisis funding levels.

Short-term funding levels now stand at around 130% on average and between 106% and 110% for the long term, according to Karel Stroobants, independent expert on the Belgian pensions industry.

Euro-denominated government bonds continue to dominate the fixed income portfolios, although Belgian pension funds now distinguish between the top quality, AAA-rated and other European government bonds. Investments in euro corporate bonds have also risen.

Equity portfolios tend to have an average split of 50% euro versus 50% non-euro investments, with smaller funds mainly having euro exposure and larger ones having more global equity investments.

Alternatives are still neither common nor popular among Belgian pension funds.

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