Funding at Swiss pension funds rises, but returns still low – Swisscanto
SWITZERLAND - The funding levels of Swiss pension funds rose in the fourth quarter of 2011 on the back of positive developments in equity markets, according to the
Pensionskassen-Monitor survey of asset manager Swisscanto.
Overall, the average funding level of all Swiss pension funds rose from 94.4% to 97% over the last three months of 2011.
Despite this improvement, their funding level worsened over the course of the year compared with the start of 2011.
The average estimated funding level for private pension funds stood at 103.1% at the end of December, up 2.8% on the previous quarter.
However, public pension funds - while gaining 2.4% in their funding level in the fourth quarter - continue to be underfunded, with an average coverage ratio of 88.1%, although some of those are partially privatised with a target funding level of 100% and therefore cannot be compared directly with private pension funds.
Swiss pension funds generated an average return of 0.1% in 2011, which falls under the target return necessary to maintain the current funding level.
As a result of the low yield, the number of underfunded pension funds in Switzerland has increased.
Swisscanto estimates that the number of underfunded private pension funds has more than doubled over the course of the year to 26%
The Swisscanto Pensionskassen-Monitor is a result of estimates based on the data of 365 pension funds with CHF431bn (€357bn) in assets under management as of 31 December 2010, as well as their selected investment strategies and market developments.
Swisscanto is now undertaking the survey without Complementa investment consulting and has therefore recalculated its estimates for the past quarters.