Swiss pension funds recorded historically high funding ratios last year, driven by strong equity market performance and increased allocations to domestic equities.
Private-sector pension funds reached a funding ratio of 119.6% at the end of 2025, the second-highest level recorded in the past 25 years, according to Swisscanto’s Pensionskassenstudie 2026, published this week.
The funding ratio of fully funded public-sector schemes rose to 113.1%, while partially funded public schemes reached 91.2%, both record highs, according to the study.
The strong funding positions were underpinned by average investment returns of 6% in 2025, generated largely by equities, which have become the largest asset class in pension fund portfolios.
Equities accounted for 34.5% of assets at the end of last year, surpassing the previous peak recorded in 2021 and reaching a new all-time high.
Swisscanto’s analysis showed that allocations to Swiss equities increased by 1.1 percentage points year-on-year in 2025, making the largest contribution to the overall rise in equity exposure.
By contrast, allocations to foreign-currency bonds fell by 0.9 percentage points, while holdings of Swiss franc-denominated bonds remained unchanged.
Bonds continue to lose ground in Swiss pension fund portfolios, accounting for an average 27.3% of assets, according to the study.
Less equity exposure planned
Swiss pension funds are moving closer to their strategic asset allocation targets and plan to modestly reduce equity exposure from 34.5% to 32.5% on average, according to Swisscanto.
At the same time, bond allocations are expected to increase from 27.3% to 29.9%.
Pension funds also plan to increase their exposure to real estate, with allocations expected to rise from 24.8% to 25.3% of assets.
Smaller increases are planned for mortgages and infrastructure investments, while liquidity holdings are expected to decline from 3.8% to 2.5% on average.
The allocation to alternative investments remained stable at 5.3% of total assets in 2025.
Within alternatives, hedge fund allocations fell from 0.8% to 0.6%, while private equity exposure declined from 1.5% to 1.4%, according to the study.
ESG gap narrows
Large Swiss pension funds have historically led smaller schemes in ESG investing. However, Swisscanto said the relationship between pension fund size and ESG allocations now applies only to a limited extent.
According to the study, the share of ESG investments among pension funds with assets exceeding CHF5bn declined from 61.5% in 2024 to 51.5% last year.
By contrast, pension funds with assets of less than CHF50m increased their ESG allocation from 21.8% to 31%.
