Spanish pension fund industry has experienced a positive growth of 16% during last year, according to the results published by Inverco, the Spanish association for collective investments and pension funds.
The total amount of asset under management by pension funds amounted to E31bn.The growth is reflected in both individual plans and the employment system as a result of the publication of the law requiring employers to externalise pension commitments with their employees.
“People’s attitudes are changing,” says Manuel Alvarez at pension insurer group Caser in Madrid. “They are becoming more aware of the fact that, even though the coverage provided by the social security in Spain is quite high, this will not last for ever.”
The influence of the introduction of the euro has been reflected in terms of asset allocation. The percentage of investment in Spanish public fixed income market has decreased from 45% at the end of 1998 to 35%, whereas the exposure to external bonds, mainly eurobonds, increased from 9% to 11%. Exposure to national equity also dropped from 14% to 12%. Foreign equity investment now represents more than 10% when in December 1988 it was around 7%.
The total non-domestic exposure, mainly Euroland, of the Spanish pension fund portfolios was 21%, compared to the 17% 12 months ago.
In terms of performance, pension funds investing in equity had in average returns of 32.85% while bonds experienced a negative result of -2,8%.
“Last year’s returns for fixed income investment were a disaster,” says Alvarez. “One of the most important aspects of these results is the move to equity investing, especially in the Euro-zone.”
“It is also important that the number of participants has increased to more than 4m. But you have to take into account that this does not mean that there are 4m people in Spain covered under a pension fund plan, since some people have more than one plan,” he says.
Commenting on the results, Angel Martínez, Inverco’s director says it is noteworthy that 80% of this year’s growth is based on net contributions and not performance. “This is a product in increasing demand.”

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