BELGIUM - A study of 90 active pension funds by consultancy Mercer suggests Belgian pension funds returned a median of 18.5% on investments by the end of 2009, thanks to a rally in equities and real estate.

The latest Pension Investment Performance Survey by Mercer reviewed approximately 60% of the 150 active funds in Belgium and then calculated the average from half of that sample again to give a median result.

The recovery is a complete reversal of investment losses in 2008, according to Willy Santermand, principal at Mercer, in part because pension funds broadly maintained their asset allocation.

"After a dreadful year in 2008 with a median equal to minus 25.2%, the ride downhill continued in the opening quarter of 2009. As of the second quarter, markets finally started to recover," said Santermans.

The actual investment returns at individual schemes have yet to be revealed, however, Santermans said individual results "vary significantly" depending on the level of risk taken and the value delivered by asset managers.

"The recent market crash clearly shows that a pension fund board who wants to be fully in control has to set its strategic and tactical risk budget and afterwards translate these into its strategic and tactical asset allocations," added Santermans.

Equities and property saw the best recoveries in Q2 and Q3, despite yet more losses in the first quarter.

Equities generated returns of -9.3%, 16.8% and 16.5% by the end of Q3, to deliver a full-year return of 28.8% while property saw a significant turnaround and lost 13.5% in Q1 before rallying to gain 13.4% in Q2 and 25.7% in Q3 - giving a full-year return on real estate investments of 24.1%.

Over the course of the year, pension funds did alter their asset allocation slightly compared with in 2008.

Average equity holdings increased from 42.7% to 50.4% and property increased from 1.6% to 2.6%, while bond holdings dropped from 47.1% in 2008 to 43.1% in 2009. Short-term instruments accounted for 1.6% of asset allocation in 2009 and other assets met the remaining 2.3%.