Compenswiss, the public institution managing Switzerland’s first-pillar social security funds AHV, IV and EO, has accelerated divestments, especially in the coal sector, last year.

The pension fund has tightened requirements on ESG criteria in line with statutory obligations, liquidity and returns, exercising voting rights for Swiss equities held in its portfolio, it said yesterday in a note on returns recorded in 2022.

The scheme has also developed measuring tools to assess whether its investment portfolio is in line with sustainability requirements, using for example the “Swiss Climate Scores” introduced by the Federal Council.

Last year, Compenswiss returned -12.85%, a result leading to a decline in terms of assets under management to CHF37.28bn (€27.6bn) at the end of 2022, from CHF40.88bn at the end of 2021, it said.

The pension fund remains committed to its investment strategy despite losses, president Manuel Leuthold told IPE, adding that the reform of the first pillar brings liquidity, giving options to invest more in illiquid assets.

Compenswiss is expanding its private debt programme, looking for managers to invest in Europe and the US.

Commenting on last year’s performance, Leuthold added:”One of the main responsibility of Compenswiss is to have sufficient liquidity available so that the three social security funds can meet their obligations at all times.”

Net returns on the assets of the the AHV, one of the three social security funds managed by Compenswiss, amounted to -12.38% in 2022, down from 4.94% in 2021, -11.24% for the IV fund, down from 4.10% year-on-year, and -12.21% for the EO fund (5.05% in 2021). The IV fund recorded losses mainly due to higher liquidity reserves.

Eric Breval, director of Compenswiss, explained that throughout the year the pension fund had sufficient liquidity to pay out pensions and other benefits without having to sell assets.

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