The funding ratios of Swiss pension funds have significantly deteriorated as a result of price movements recorded since the beginning of the year, according to the latest Swisscanto Pensionskassen-Monitor report.

The report showed that 16.1% of private pension funds, 44.4% of fully funded public pension funds, and 91.6% of partially-funded public pension funds are underfunded.

Only 20.6% of private pension funds and 8.3% of public pension funds in Switzerland is recording a funding ratio more than 115%, as of the end of last year, it added.

The funding ratios of private pension funds stood at 105.6% at the end of last year, down from 122.1% at the end of 2021. The funding ratios of fully funded public pension funds dropped from 112.9% at the end of 2021 to 96.7% at the end of 2022.

Partially-funded public pension funds recorded funding ratios of 79.9% at the end of last year, down from 90.8% at the end of 2021, according to the report.

The pension funds returned 1.36% in the fourth quarter of 2022, driven monthly by the positive performance of commodities at 17.9%.

Last year, Swiss bonds lost 12.1%, foreign bonds returned -17.3%, foreign bonds hedged in Swiss francs -13.7%, Swiss equities -16.5%, global equities -17.4%, direct and indirect investments in Swiss real estate -5.4% and hedge funds - 6.6%, the report said.

Pension funds set aside a high amount of reserves at the end of last year, that have fulfilled their function to help against market volatility in the vast majority of cases, Swisscanto said.

The positive development of equity markets since the turn of the year might lead to improved funding ratios quickly, it added.

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