15.10.2011 - Governing Board of Pension Savings Trust, following the concerns emerging from the global financial market declines, where are invested the assets of the Trust's contributors, and following the various reports in local media that righteously increased the contributors concerns, issues this public statement.

The Board wants to remind the public opinion that investment strategies of pension savings have long-term goals - 20 to 25 years - and monthly or quarterly movements should not radically affect the investment policy. We have to bear in minds all the time, that the average age of the Trust’s contributors is under 40 years.

Argument to support this claim is the fact that Trust since its establishment witnessed positive return in 8 years, while negative return occurred only in 1 year. 

Furthermore, since the establishment of the actual Board, in April, 2009, only two out of ten quarter periods had negative investments performances, while remaining eight quarters had positive performances. This, we are reiterating, happened as a result of investment policies implemented by this Board, since its appointment from the Kosovo Assembly.

Board wishes to inform contributors that their pensional savings are invested in most developed world countries, while investment portfolio is diversified in order to protect their pensional savings from the financial markets declines. Although this year’s economic crisis severely hit even most advanced global economies, pension savings are continuing to be preserved from eventual declines, while they can quickly recuperate following the market recoveries. At the same time, current markets situation represents very good opportunity to purchase shares of the biggest world companies with unprecedented low prices, which in longer term periods could be very convenient for our contributors. 

Also, in line with several years’ policy of Trust to charge its contributors as little as possible, Board proposed for the Kosovo Assembly to further reduce a management fee. Thus, Trust will continue to be the institution with by far the lowest management fee in region and further; always comparing with similar pension institutions of countries such are: Bulgaria, Croatia and Macedonia.

Investment Performance

Regarding Trust’s quarter and annual investments performance, please see Table 1.

Board estimates that although at the end of September investments marked a decline, during the second half of October markets marked a significant recovery. Trust will have a return of investments of only -5.3 million of Euros, respectively share value will be around 1.02 €, as compare to 1.03 at the beginning of the year.

Although investment performance during this period was not satisfactory, funds under Trust’s management during this year’s nine-month period continued to increase. Managed funds were increased for around €62 millions in 2011. Respectively, from around €495 millions at the beginning of January of this year, this amount increased to around €557 million during this month.

It’s already widely known that declines in global financial markets occurred because of the European Union (EU) debt crisis, especially related to Greece. At the same time, risks for similar crisis in Portugal, Italy and Spain are potential options, and will continue to keep the pressure in the financial markets and commercial banks.

The investor’s fears that Greece will fail to repay debts and inability of international institutions to provide assistance through additional loans, caused the worst quarter performance of markets since the crisis of 2008.

However, Trust’s investment portfolio was able to mitigate the consequences of market declines through the diversification of assets in several financial instruments, known as diversification of investment portfolio. As an example, DAX Stock Index in Germany during the reported nine-month period declined for more than -20% as compared to -3.2% of Trust’s investment portfolio.

Regarding the forecasts for fourth quarter, there are no firm and assuring stances to date, from important international financial institutions. Outcomes are related to many factors, while the main factor continues to be: resolution of EU debt crisis problem from the governments of these countries.

Furthermore, Board will announce the express of interest for all commercial banks to invest more contributors’ funds into Kosovo’s banking deposits. We hope that this will help banks to have more funds available, thus, kosovars can have access to loans with lower interest rates.

In the end, Trust’s Governing Board reiterates its request to national institutions to enable investments within Kosovo of greater share of contributor’s funds. To do so, it is perquisite to develop the legal framework and to establish the financial instruments.

Table 1: Investments performance by quarters for 2011