Pension Plans Rebound with $2.25 Billion Increase in May
Commercial truces boost pension values after a three-month slump.
Pension plans in individual systems saw a resurgence in May, adding approximately €2.107 billion—equivalent to $2.25 billion—to reach a total of €91.725 billion under management, according to Inverco data. This increase marks a significant recovery after several months of decline.
Market Revaluation
Inverco noted in a press release that pension plan portfolios were revalued thanks to the “Good behavior”
of financial markets during May. This positive shift is attributed to the easing of commercial tensions between the United States and various countries and economic blocs.
However, volatility persisted due to ongoing threats from the White House. Even so, pension plans managed to break free from a “Three -month streak of patrimonial falls.”
Losses were recorded in April (€840 million), March (€3.1 billion), and February (€13 million). Despite May’s gains, pension plans have retreated 0.54% since the close of 2024, representing a loss of €505 million.
Long-Term Gains
Looking at the bigger picture, pension plans closed last year with an accumulated rise of 8.6%, or €7.260 billion. Over the long haul, these savings options have remained profitable. Plans spanning 26 years have an annual average profitability (net of expenses) of 2.2%.
Medium-term plans (10 and 15 years) show respective profitability rates of 2.5% and 3.8%. As of March 2024, the average 401(k) balance was $138,700, according to Fidelity, highlighting the potential for substantial retirement savings (Fidelity).
Recent Profitability
The profitability of total pension plans over one year has reached 5%, a notable increase from 3.7% last month. Variable Rent plans have performed particularly well, climbing to 6.5%, though they held a 16.4% profitability three months prior.
Long-term fixed income plans, despite fears of commercial and economic fallout from the **Trump** administration’s policies, have shown a year-over-year performance of 5%, with the profitability settling at 3.3% by the end of May.
Throughout May, estimated contributions totaled €107 million, while benefits reached €169 million, resulting in net benefits of -€62 million for the month.
