Clarification on the state of KPST investments

The Kosovo Pension Savings Trust (KPST) is following the public discussions about the state of the institution’s investments and to inform the public it provides these clarifications.

The assets under the management of KPST are handled in two investment portfolios:

1) Standard Portfolio (which includes all contributors up to the age of 63).

2) Conservative Portfolio (which includes all contributors aged 63 and over).

The pension assets of contributors in the Standard Portfolio consist of investments with higher potential of return and higher risk, therefore they have higher volatility. Due to the circumstances in the financial markets from March 10 to March 17, 2023, where some important banks of the global economy had liquidity difficulties, thus affecting the markets, the investments of the KPST of the Standard Portfolio have also faced strong fluctuations. This caused that all the positive return from investments for the months of January and February 2023 to be devalued, and for the period from January 1, 2023 to March 20, 2023 (for the last date the data are available) the Standard Portfolio decreased by – 1.5% or a gross return of about -36 million euros.

While for the same period, the Conservative Portfolio has a positive return of about +0.7% or about 800 thousand euros, since the investments of this portfolio are in instruments with significantly lower potential return and risk. From this portfolio the contributors of the age of 63 and above retire, therefore will not be affected by fluctuations in the financial markets. Furthermore, even under current circumstances Conservative Portfolio have a positive return YTD. This is also the most sensitive category (contributors of age 63+) of contributors from downfall periods, and this solution has given them a very satisfactory protection.

Based on the experience of the institution and the composition of the current investment portfolio, we cannot say that the entire fund of the KPST is at risk, but the institution is currently is facing a difficult situation without the main decision-making body (Governing Board) – according to the legislation in force.

At the same time, we want to clarify that the KPST has performed all tasks on time, by notifying the Selection Committee several times about the expiration dates of the Governing Board members. Also, the KPST, according to the request of the Committee, announced the call for members of the Governing Board and after the end of the announcement, all the documentation was submitted to the Central Bank of Kosovo.