The board of trustees of AXA Stiftung Berufliche Vorsorge, the Swiss foundation for the insurer AXA responsible for occupational pensions, has decided to apply an interest rate on saving assets for retirees in 2020 of 2.25% for the mandatory part of pensions, and 3% for insured beyond the mandatory threshold.
The interest rate is above the level set by the Swiss Federal Council for 2020, at 1%, and reaffirmed for 2021.
The mandatory part of occupational pensions, which applies to people who are already insured in the first pillar AHV, refers to annual wages of between CHF21,510 and CHF86,040.
Pension institutions can distribute benefits for wages beyond the range established for the mandatory part of occupational pensions.
Daniel Gussmann, chief investment officer at AXA Switzerland, said the returns in 2020 reached 4.9%.
He explained in an interview with daily national paper Neue Zürcher Zeitung that returns were generated through a well-diversified portfolio containing equities, real estate and bonds.
“To guarantee a solid return, we pursue an investment approach that takes into account the risks, with a high degree of diversification based on the best-in-class principle and strict ESG criteria, Gussmann said, adding that this sort of strategy pays off also in times of high volatility.
The funding ratio for the AXA Stiftung Berufliche Vorsorge stands currently at 110%.
For 2020, the three AXA foundations, including also the Stiftung Zusatzvorsorge and Stiftung Westschweiz, paid out a total of CHF406m to insured with returns.
A flexible architecture
AXA has relied since 2019 on semi-autonomous foundations that have a degree of independence and flexibility in investment strategy, free from tight regulatory requirements, it said.
AXA is therefore able to invest in asset classes yielding higher returns in the long-term with lower costs, it added.
The AXA foundation for occupational pension in west Switzerland, AXA BVG-Stiftung Westschweiz, has applied an interest rate for 2020 of 3% for the mandatory part of occupational pensions and 3.75% for above the mandatory threshold.
The foundation for supplementary pensions, AXA Stiftung Zusatzvorsorge, applies an interest rate of 3.75% on saving assets.
AXA has conducted a “balanced investment strategy” during the COVID-19 pandemic to steer clear from risks of a temporary underfunding despite market fluctuations, it said.
The foundations had additional reserves of CHF3bn since inception in 2019.