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Year-end rally fails to lift Swiss pension funds into positive territory

SWITZERLAND - Swiss Pensionskassen ended 2011 with a negative performance, according to initial estimates by Credit Suisse.

Last year, Swiss pension funds lost 0.56% on average, Credit Suisse calculated for its Pensionskassen-Index - based on a sample of pension funds for which the Swiss banking group acts as global custodian.

Despite posting an average 2.6% return in the fourth quarter, the impact of negative previous quarters could not be cancelled out. 

According to Credit Suisse, the main contributor to the postive result in the fourth quarter was equities - both foreign and domestic.

Nevertheless, the return once again failed to meet the legally required minimum interest rate, or Mindestzins.

Changes to the rate are under discussion as part of the government’s long-awaited consultation paper on the future of the second pillar, while  last year it agreed to lower the rate from its current 2% to 1.5% from 2012 onwards.

The annualised return for the Pensionskassen-Index, first calculated in 2000, now stands at 1.85%  - well below the annualised legal minimum of 2.81% for the same period.

Credit Suisse found that asset allocation for Swiss Pensionskassen remained more or less unchanged over the past year, with liquidity at 6.9% - compared with 7.1% at the beginning of 2011.

Swiss equity exposure fell by 1.4 percentage points to 11.3%, while foreign equities dropped from 17.1% of investments to 16%.

Domestic bonds dropped from 26% last year to 25.8%, while foreign bonds were pared back slightly from 8.9% to 8.8%.

Allocations to real estate increased by 0.6 percentage points to 20.4%.

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