Swiss pension funds recorded a -0.04% performance in the third quarter of this year, down from 3.30% in Q2, according to Swisscanto Pensionskassen-Monitor.

The negative performance in the third quarter was the result of lower returns on equities and bonds.

Swiss equities saw negative returns of -1.97%, foreign equities of -0.08%. Swiss bonds returned -0.44%; foreign bonds hedged in Swiss francs -0.19% and foreign bonds -0.03%.

Commodities gained 7.56% in Q3 for 36.31% year-to-date performance. Direct and indirect investments in real estate in Switzerland returned 0.6% in the third quarter and 4.84% so far this year.

Hedge funds investments returned -0.36% in Q3 but a positive 2.80% so far this year. Total returns year-to-date for Swiss Pensionskassen stand at 7.09%.

The funding ratio of private pension funds fell quarter-on-quarter to 122.7% in Q3 from 123.3% in Q2. Fully funded public pension funds’ funding ratio decreased to 115.3% in the last quarter.

The reserves of private pension schemes decreased by an average of 0.6 percentage points in Q3 to 22.7% because of losses on equities and bonds, but remained above the target of 18%.

All fully funded public pension funds and 99.1% of the private pension schemes had a funding ratio of over 100% on 30 September; 84.5% of the private pension schemes recorded a funding ratio of 115% or higher.

The Pensionskassen-Monitor is based on data of 514 pension funds with assets totalling CHF777bn (€727bn).

DAX pension assets up

The positive trend on capital markets has pushed up pension assets in companies listed on the DAX index in the third quarter of this year, according to Willis Towers Watson’s German Pension Finance Watch.

Pension assets of the largest firms in Germany in terms of market capitalisation grew by 2.8% in Q3 to €291.5bn. The discount rate rose to 1.34% in the third quarter from 1.2% in Q2, leading to a decrease in pension obligations to €397.2bn.

As a result the ratio between pension assets and pension obligations rose by 2 percentage points to 73.4% in Q3 compared with the first half of the year, and 9 percentage points compared to the prior year.

The discount rate has increased by 54 basis points since the start of the year, cutting pension obligations by around 9%, WTW said.

From mid-September the DAX expanded to comprise 40 firms, up from 30 before, while the number of firms listed on the MDAX index decreased from 60 to 50.

The consultancy calculated retrospectively that from the end of 2020 this led to an increase of around €18bn in pension assets and around €30bn in pension obligations in the DAX.

This means that pension assets of the companies listed on the DAX index increased by around €18bn and pension obligations by around €30bn, while plan assets set aside by companies listed on the MDAX to cover pension obligations fell by €21bn and pension obligations by €35bn.

Willis Towers Watson said the level of funding in both the DAX and MDAX remained almost the same after the expansion of the DAX and the downsizing of the MDAX.

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