DACH roundup: Swiss pension funds returns 4.6% in H1

Swiss pension funds returned on average in the first half of this year 4.6%, reverting the trend seen last year, according to figures published by the occupational pension supervisory commission OAK BV.

All asset classes delivered positive returns in the first half of the current year, with equities (10.1%) and alternative investments overall (7.0%) performed particularly well, OAK BV stated, followed by bonds (2.4%), infrastructure (1.2%), and real estate (0.5%).

OAK BV warned, however, that financial markets are currently characterised by high volatility and inflation in an environment where geopolitical tensions persist, with the potential for further interest rate hikes by central banks, which could impact future economic development.

Meanwhile, the funding ratios of Swiss pension funds increased from 107.0% at the end of 2022 to 111.3% as of the end of June this year. As a result, the share of Swiss underfunded pension funds fell from 16.1% at the end of 2022 to 7.3% by mid-year.

WTW warns of further liabilities for Swiss corporate schemes

Consultancy WTW Switzerland has warned companies to remain vigilant of additional liabilities arising from inflation-driven pension increases for their pension schemes.

Pension funds should also remain vigilant for potential risks impacting their assets coming from market adjustments, it added.

Discount rates for Swiss corporate pension schemes fell around 25 basis points during Q2, resulting in liabilities increasing by 3.9%, according to the WTW Swiss Pension Finance Watch for Q2 2023. Investments returned 1.7% – not enough to offset the increase in liabilities.

The WTW’s Pension Index dropped by 2.7% during Q2, and the funding ratio of corporate pension schemes in Switzerland stood at 126.1% at the end of the second quarter, down from 128.8% as of  March this year.

GDV releases report on occupational schemes and insurers

The German Insurance Association, GDV, has published a report about occupational schemes and insurers, which shows that 106,100 people started making provisions for their old age in 2022 through Pensionskassen and Pensionsfonds, an increase of 8.4% from 2021.

The total portfolio of Pensionskassen contracts fell to 3.5 million (1.7%), while investments increased from €52.5bn at the end of 2021 to €54.3bn at the end of 2022, the report disclosed. Pensionsfonds saw the number of contracts increase by 7.7% year-on-year in 2022 to 600,700, and contributions by 72.7% to €3bn.

The number of direct insurance contracts, one of the forms of occupational pension arrangements, reached an all-time-high of 8.8 million last year, according to GDV.

Last year life insurers, Pensionskassen and Pensionsdonds saw contributions falling by 5.9% year-on-year to €97.1bn. The amount of benefits paid out rose by 5.4% last year to €91.2bn. The number of new contracts also decreased to 4.5 million, a decline of 8.9% year-on-year.

The number of new Riester-Rente contracts stood at 125,200 in 2022, down 59.8% compared with 2021.

Institutional investors invest €230m in KKA Partners private equity fund

A diverse group of institutional investors, including endowment funds, pension funds, insurance companies and large family offices, as well as entrepreneurs, has invested €230m into a private equity fund managed by KKA Partners.

The Berlin-based private equity firm that invests in DACH-based SME companies, growing enterprises through technology enablement, did not disclose the investors’ identities, but said that 40% of commitments came from institutional investors in the US.

The fund, KKA’s second, has completed four platform investments, with a primary focus on the B2B services and healthcare space. KKA’s current portfolio includes Curamed, a group of private German mental health clinics, Xantaro, a German/UK IT services and software business for critical communication networks, SSF, a leader in the business process outsourcing space and Prokuras, a real estate services company.

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