SWITZERLAND – Novartis’ pension fund, one of Switzerland’s biggest with CHF14.6bn (€9.3bn) in assets, has reported a return of 6.2% for 2005 - well below the 11% average for other Swiss schemes.
Instead of raising its exposure to equities to profit from last year’s bull run, the scheme said its investment strategy “was aimed at maintaining value”.
As a result, it had 63% of its assets invested in fixed income compared 12% in equities. The fund had another 12% of assets allocated to real estate assets and 12% in cash during 2005.
The pension fund, which serves almost 11,000 employees at the health care company, also said that between an increased flow of resources and unrealised gains on investments, its assets increased CHF216m.
Meanwhile, the fund’s coverage ratio – or the extent to which it can fund liabilities – stood at 121.5% at the end of 2005, making it one of the most overfunded schemes in Switzerland.
“The financial situation is very sound…The investment strategy is aimed at achieving long-term security, taking into account the concrete asset-liability status of the fund, i.e. its actual financial situation as well as the structure and the likely development of its insured membership,” the fund said in its report for 2005.
The fund is a defined benefit scheme which aims to provide retired employees with 60% of their previous income. Its funding is based on 2-to-1 ratio of employer to employee contributions. The scheme has near 18,300 pensions to whom it pay out an average annual pension of CHF37,824.
Separately, Ascoop, a CHF2.1bn pension fund for the Swiss transport sector that is currently restructuring, said its return for 2005 totalled 10.1%.
Thanks to a good performance of its investments, Ascoop added that its coverage ratio improved to 80.5% in 2005 from 76.5% in 2004.