SWITZERLAND - Swiss pension funds returned 3.5% on average over the first half of the year, while leaving their asset allocations more or less unchanged.

Equities accounted for the lion's share of the performance, according to survey by Swiss pension fund association Asip and Towers Watson of 95 pension funds with more than CHF180bn (€150bn) in total assets.

Asip said asset allocation remained virtually unchanged over the period, shifting only slightly due to market movements, as opposed to active allocation decisions.

As at the end of June, Swiss Pensionskassen had almost 45% in bonds (compared with 44% at year-end 2011), 27% in equities (the same as six months before), 14% in real estate (13%), 1.8% in commodities (2.8%), 2.2% in hedge funds (3%) and the rest in cash and other money market instruments.

In a separate survey by UBS, a different sample of Pensionskassen reported an average performance of 5% - also due to the good performance of equities in the first half of 2012.

Asip welcomed the signs of recovery, after Pensionskassen returns remained more or less flat for nearly the whole of 2011.

But the association also it stressed that changes to the system would still be necessary and renewed its demands for a lower conversion rate and a cut of the minimum interest rate to ease the pressure on Pensionskassen - two steps that are currently being debated as part of a larger review of the Swiss second pillar.