SWITZERLAND - The current financial crisis has thrown many Swiss Pensionskassen back under the fully-funded mark but Michael Brandenberger, CEO of consultancy Complementa, has claimed most funds are in a good position to weather the storm.
Estimates by the Swiss consultancy suggest 18% of all private Pensionskassen were below the 100% funding level by mid-September.
According the the most recent Complementa study, covering around 80% of all second-pillar pension assets, this number was below 1% at the end of 2007.
"On average, the Pensionskassen are still well-positioned," said Brandenberger.
The weighted average funding level of all participating pension funds was at 109.1% last year - only 0.2% lower than at year-end 2006 despite troubles beginning in the financial markets.
"This shows that trustees of Swiss Pensionskassen are not only passively but are actively performing their duties both in relation to tackling underfunding as well as dealing out surplus money," Complementa noted.
Brandenberger said trustees were more active than ever before in managing their pension plans and he commended them on this development.
The stagnation in funding levels broke a trend which had seen average funding levels increase by 2.1% and 8.6% in 2006 and 2005 respectively.
A separate study by Swisscanto confirmed the slight drop in the funding level last year of 1.7 percentage points - the difference in figures owing to the fact that both studies are voluntary and different pension funds are participating.
The Swisscanto survey confirmed earlier studies which showed the average 2007 performance to be around 2%. (See earlier IPE article: Swiss funds saved by direct real estate)
However, Brandenberger pointed out calculations of performance varied greatly among Pensionskassen, which made any comparison of these figures difficult.
"There is a trend towards more professional performance measuring but some funds still just make very simple calculations," he noted.
The Complementa study found there has been a significant increase of investment in alternative assets, especially commodities, as 28% of all participating Pensionskassen are using them, compared with 17% one year earlier.
In total, exposure to alternatives increased from 5.9% to 6.9% but Brandenberger thinks this growth is unlikely to be sustained for 2008 as funds have been disappointed by hedge fund investment returns.
That said, investing in alternatives will be easier from next year as no special permission is required from January for these investments so some funds might consider a larger exposure over the next years. (See earlier IPE story: Minimum return rate to be slashed)
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