The returns of Swiss pension funds have suffered a setback in the third quarter of this year, with declining equity markets and rising interest rates resulting in a slightly negative performance, according to the occupational pension supervisory commission OAK BV.

Q3 2023 was marked by weakening returns for almost all asset classes, following positive developments in all investment categories up until the middle of the year, the regulator said.

Infrastructure investments have recorded the worse returns (-5.8%), among the asset classes so far this year.

However, alternative investments have performed well overall in the first nine months of this year (9.6%), an improvement from 7% achieved in hte first half of the year, according to OAK BV.

Equities and bonds have instead lost ground quarter-on-quarter in Q3, from 10.1% to 7.1% in returns for the former, and from 2.4% to 1.3% for the latter.

Returns on real estate investments by pension funds also went slightly down quarter-on-quarter, from 0.5% in H1 to 0.1% in Q3, according to OAK BV’s figures.

Overall, the performances of Swiss pension funds remain positive at 3.3% on average in the first three quarters to this year, but below average returning 4.6% in H1 2023.

The average capital-weighted funding ratio stood at 109.6% at the end of the third quarter, down from 111.3% recorded in H1, but slightly above the 107.0% at the end of last year, according to OAK BV.

This means that the share of underfunded pension schemes has fallen, from 16.1% at the end of 2022 to 15.2% at the of the third quarter of 2023.

However, the performance achieved by pension funds up until the end of September has not significantly reduced the underfunding recorded last year, OAK BV said.

Pension funds willl likely take recovery measures depending on the extent and causes of the underfunding, it added.

OAK BV has warned that pension schemes face high volatility in financial markets, with an already fragile geopolitical situation that has worsened further with the war in the Middle East.

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Luigi is IPE's Berlin-based DACH correspondent. His coverage includes regulation and the latest pensions and investments trends, and, being a native Italian, he also covers Italy’s pensions market. He has reported from Italy and Germany on international politics and business for European and US publications including USA Today, Bloomberg BNA and for the investigative magazine L’Espresso. He was previously Germany correspondent for Mergermarket covering M&A.View full Profile

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