SWITZERLAND - The AHV/AVS Swiss Social Security pension fund saw its assets under management fall by 18.2% in 2008 and is now reviewing the timeframe within which it makes asset allocation decisions as a result.
Officials noted the “extraordinary market conditions” failed to halt the decline despite its board of directors and management taking “several measures” last year to keep the negative return “within limits”.
Among those moves, officials reduced equity, listed real estate and commodities holdings and the action did at least reduce the losses “by several percentage points” and its asset allocation strategy has been adapted as a result.
What the situation showed, however, is decision-making had to be adjusted, according to officials behind the CHF23bn (€15bn) fund, so the board of directors is planning in the first few months of 2009 to “shorten the planning horizon for the investment strategy even further”, as well as reduce “higher risk items such as investments in shares”.
Officials said even though it had pursued a balanced investment strategy over a number of years, they felt it was impossible to have been able to predict “the severity of the duration of such crises”.
That said, it has sought to reassure members it will not affect AVS pensions.