BVK, the CHF40.2bn (€43.2bn) Swiss pension fund for the employees of the canton of Zurich, reached a 109.3% funding ratio at the end of 2024, up from 102.9% in 2023.
The pension scheme returned 8.1% on investments made last year, a result that improved from the 7.2% recorded in 2023.
However, in 2023 BVK’s economic funding ratio, which gives a clear picture of the actual financial situation of the pension fund, stood at 94.6%, down from 96.2% in 2022, according to the scheme’s financial statement for 2023, the latest available.
Chief executive officer Thomas R. Schönbächler described 2024 as “an above-average year” in terms of returns.
The scheme invests 42.3% of total assets in fixed income, 34.6% in equities, and 20.8% in real estate and infrastructure, the statement added.
The share of investments in companies generating more than 5% of revenues from coal was 1%, below the benchmark of 1.6%. The share of investments in companies generating more than 5% in revenues from fossil fuels was 9.6%, also below the benchmark of 9.9%, according to the scheme’s report on sustainable investing.
With returns achieved in the last few years, BVK re-emerged from an underfunding of 97.6% in 2022, which led the scheme to lower the interest rate paid on pension savings to 1.5%. The pension scheme will apply again an interest rate of 2% on pension savings, it said.
BVK reduced the technical interest to discount pension obligations from 2% to 1.75% in the past. It also cut the conversion rates to calculate pension payouts, according to the latest financial statement.
Lower retirement benefits for members who are still employed, as a consequence of a lower conversion rate, will largely be compensated. For this reason, the pension capital available to actively insured persons was increased to CHF518m in the past few years.
Last year, BVK continued to increase its membership to around 142,800, an increase of 2.7% year-on-year.
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