A high allocation to real estate and infrastructure has helped Migros Pensionskasse (MPK), the pension fund for the Swiss retailer, to partially compensate for high losses on equities and nominal value investments, it said.
The pension fund recorded a -5.6% performance last year, facing major challenges on the market, but exceeding the target for returns by 1.6 percentage points. Its funding ratio fell by 9.4 percentage points to 124.5%.
“The performance of -5.6% in 2022, which is modest in absolute terms but relatively good in comparison with other pension funds in Switzerland, is mainly the result of an allocation of a good 40% [of the fund’s total assets] to Swiss real estate, international real estate and infrastructure,” chief executive officer Christoph Ryter told IPE.
The CEO added that MPK is not planning major adjustments to its asset allocation in 2023.
The broad diversification of its investment portfolio, in addition to real estate and infrastructure, has had a positive impact on its risk/return ratio, the pension fund said.
MPK had adjusted its investment strategy on the basis of an asset and liability management analysis in 2021, increasing the allocation to real estate and infrastructure investments, at the expense of nominal value investments.
It also shifted to the MSCI ACWI ex Switzerland Climate Paris Aligned benchmark for world equities, the CEO said.
The Pensionskasse had assets under management totaling CHF28.25bn (€28.6bn) at the end of January this year, investing 32.7% of its assets in nominal value investments, 26.3% in equities, 38.9% in real estate and 2.1% in gold.
The fund’s investment strategy for 2023 targets 33% of total assets allocated to nominal value investments, 28% in equities, 37% in real estate and 2% in gold.
The pension fund catered for 80,200 members as of the end of 2022, a loss of 800 members year-on-year. In total, 29,300 members of the pension fund are retirees.
Migros Pensionskasse had decided to switch from a defined benefit to a defined contribution system this year, it said. It is applying an interest rate on retirement assets of 3% for 2023 for employed members.
Pensioners received an additional payment of one month’s pension of at least CHF500 in December.