BVK, the Swiss pension fund for the employees of the canton of Zurich, and one of the largest in the country, returned 7.2% last year, with a funding ratio rebounding to over 100%.

Thomas R. Schönbächler, the pension fund’s chief executive officer said that “2023 was a rollercoaster of emotions in terms of performance”, commenting on the past financial year’s results.

With a performance of 7.2%, from -11.2% in 2022, the scheme’s funding ratio returned to a healthy level of 102.9%, from 97.6% in 2022, BVK added.

A consistent implementation of the pension fund’s investment strategy, the economy remaining robust, and inflation rolling off towards the end of last year were the main reasons for the good investment performance, according to Schönbächler.

The positive result has also had a direct impact on the interest rate paid on pension savings of members still working. With a funding ratio above 100%, BVK will apply an interest rate on pension savings of 2% from the middle of the year, it said.

BVK has also introduced two new pension plans in Janaury – the ‘Dyna’, short for Dynamic, seeing the amount of pension benefits decrease over time from the start of the retirement phase, and the ‘Kombi’, for members to withdraw an amount of pension benefits in cash all at once at the time of retirement.

“The interest [in the new pension plans] clearly exceeded our expectations,” said Schönbächler.

Last year, the fund’s membership grew to 139,000 members, a 3.9% increase compared with 2022, while administrative and asset management costs fell to a record low of CHF0.13 per CHF100 (the industry average is CHF0.50), it said.

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