SWITZERLAND - Funding levels at Swiss company pension plans deteriorated again over the second quarter after recovering in the first quarter, Towers Watson has found.
According to the consultancy's latest Swiss Pension Finance Watch, funding levels of the "typical Swiss pension plan" under IAS19 fell by around 4% - from 100 points in the benchmark Pension Index at the end of March to 96 points at the end of June.
John Carter, senior consultant at Towers Watson Zurich, said: "This reduction reflects the fact asset returns were slightly negative overall in the second quarter."
Towers Watson added that there was also a decrease in the benchmark discount rate by around 0.2%, leading to higher liabilities.
Calculated since the beginning of the year, the decline was less pronounced - down from 98.4 points - as "relatively good investment returns", along with a "relatively high discount rate", propelled the index up over the first quarter to its highest level since 2008.
Over a longer period, funding is now back to the 2005 levels from which it rallied up to the all-time high of just over 110 points in the summer of 2007.
After that, the index fell sharply to 83 points at the beginning of 2009, which was, however, not as low at the early 2003 trough of 79 points.
In line with other consultancies, Towers Watson has warned companies of changes under the revised IAS19 standards.
Carter said: "There may be significant volatility, which can lead to substantial balance sheet impacts."
He recommended reviewing "how assets and liabilities are matched and expected to move over time".