SWITZERLAND - Swiss Pensionskassen saw their reserve buffers begin to melt in 2007 after two years of significant growth, official statistics have revealed.
Reserves in Swiss Pensionskassen had been growing by 85% and 25% in 2005 and 2006 consecutively.
However, last year 2.5% in buffer funds had to be used to patch holes in pensions funding and instead reduced the reserves to CHF51.4bn (€34.2bn).
"It should be expected that this negative development will be amplified because of the current situation on the financial markets," noted the bureau of statistics noted in a statement.
The level of underfunding in non-state Pensionskassen was reduced by 27% thanks to additional payments from sponsors but the underfunding in state funds actually increased by 6.6% last year.
Nevertheless, fewer Pensionskassen of the 189 which are regulated by the ABV were funded above 100% at the end of 2007 than in 2006 - their number decreasing from 93% to 89% - according to the most recent report by the supervisory authority.
Swiss pension fund have to put aside reserves as soon as it reaches the 100% funding level.
Meanwhile, Swiss consultancy Lusenti published the second part of its institutional survey in which Pensionskassen were asked about their reporting and controlling.
The study found close to half the fundssaid they preferred in-house staff "when calculating general indicators and monitoring legal and regulatory requirements".
"With respect to risk and performance control and monitoring, however, investment advisors and their custodian banks played a greater part," the consultancy noted.
Pensionskasssen also said regular contact with outside managers and monitoring of asset management fees was an important requirement of their practice.
The bureau of statistics also noted Pensionskassen increased their holdings in foreign investments, both in equity and bond exposure, while there was a huge leap in alternative investments.
In 2007, strong economic development increased active pension fund membership under the mandatory system to 3.5 million people (+3.1%) while the number of Pensionskassen in the market fell to 2,530 from 2,669.
Contributions grew by CHF6.6bn to CHF44.6bn with those by employers growing significantly more (+23% to CHF26bn) than those by employees (+11% to 18.6%).