Asga Pensionskasse, the Swiss multi-employer pension fund, is expecting negative returns on investments this year of -6%, it said.

If confirmed, the negative returns in 2022 would represent the worst performance of the pension fund in the past 10 years.

Asga recorded the worse net performance in the last 10 years in 2018 at -1.24%, according to the pension fund’s financial statement.

Asga’s returns this year are following the same trajectory of those of large European pension funds recording the worst performances since 2008, according to IPE data.

Despite the negative returns, Asga will apply an interest rate on saved capital of its members of 2.5% in 2022. Last year, with returns of 10.16%, the pension fund applied an interest rate on pension assets of 3.25%, according to the statement.

Asga can, therefore, apply an interest rate on saved pension assets that is higher than the minimum of 1% set by government for the second pillar, said managing director Sergio Bortolin.

Sergio Bortolin at Asga

Sergio Bortolin, Asga

The Swiss government has decided to keep the minimum interest rate applied on pension assets in the second pillar unchanged at 1% also in 2023.

Asga has built up reserves to withstand fluctuations in capital markets, facing the upcoming challenges of stable foundations, Bortolin said.

Swiss pension funds must set up reserves to compensate for fluctuations in the capital markets. Depending on the pension fund’s investment strategy, reserves amount to between 10-20% of pension assets.

Asga counted 16,203 companies and 152,046 individuals as members, as of September, with a funding ratio of 110.8%, as of October.

In September the pension fund recorded returns of -8.96%, and a funding ratio of 108.94%, according to the scheme’s statement.

The scheme had assets under management worth CHF24.78bn at the end of last year, invested mostly in foreign equities (22.40%), in bonds denominated in Swiss francs (19.14%), in Swiss real estate (13.50%), and in Swiss equities (11.08%).

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