FRANCE – Investment returns at France's Fonds de Réserve pour les Retraites (FRR) jumped to 10.5% in 2012, while assets under management climbed to €36.6bn, recovering from the fall recorded in 2011.
Releasing its annual results for 2012 today, the French reserve fund said it posted a net increase of €1.5bn in the value of its investments in 2012 after AUM fell from €37bn in 2010 to €35.1bn in 2011.
The final volume of AUM recorded comes after payment of the €2.1bn owed to the Caisse d'Amortissement de la Dette Sociale (CADES) over the course of 2012.
Under the pension reform introduced in 2010, the previous government established that the FRR would need to make 14 annual payments of €2.1bn to the CADES, which is used to refinance the debt incurred to pay pensions.
The move was part of the government's plan to rebalance France's pension budget.
The FRR made its first payment to the CADES in 2011.
The last transfer is planned for 2024, when the fund is set to close down.
Additionally, the FRR recorded a return of 10.5% over 2012, net of management costs.
It attributed the gain to its return-seeking portfolio, which returned 12.7%, achieved almost exclusively over the second half of the year and offsetting the fall of 5.9% recorded in 2011.
The fund also attributed the performance to the fall in sovereign bond rates and yield premiums on non-sovereign issuers, which enabled its hedging assets to return 10.1%.
The FRR finally said that its gearing ratio now stood at 135%, close to the level of 138% recorded in December 2010 when its new asset allocation was set, following the pension reform.
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