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Strong Q3 returns help Swiss schemes improve funding

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Swiss pension funds have raised funding levels after posting 2% average returns over the third quarter.

According to the latest Towers Watson Swiss Pension Finance Watch, the average return since the beginning of the year now stands at 5.7%.

Compared with the quarter previous, the funding level for the consultancy’s benchmark model pension fund improved by 100 basis points to 99.1% over the period.

Towers Watson also pointed to the slight decline in the discount rate and subsequently marginal increases in liabilities over the third quarter as a further boost to funding.

But Peter Zanella, managing director at Towers Watson Switzerland, warned companies and pension funds “not to get lazy” and called on them to continue de-risking.

In the latest Swisscanto Pensionskassen study (available in German and French), PPCmetrics highlights the growing risk of “misinterpreting” the ever-expanding body of second-pillar data.

The Swiss consultancy said the risk-based funding level it developed painted a much more “heterogeneous” picture of the funding landscape.

It said its data even identified a pension fund with 100% funding and a 0% risk-based funding level when technical parameters and demographics were taken into account.

On average, the risk-based funding level is several hundred basis points lower than the other, but the consultancy took pains to stress the significance of the “heterogeneity”, with risk-based funding levels ranging from 0% to 175%, and most Pensionskassen near the 100% mark.

Readers' comments (1)

  • Wow, I see Zanella doesn't want pension funds to get lazy. God forbid !

    I don't suppose Zanella or TW or any of the other "consulting" firms care much about what or how companies do pensions as long as they keep paying for meaningless actuarial valuations aligned with the Swiss chamber (pot) of actuaries

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