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Swiss pensions return to full funding

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SWITZERLAND - Swiss pensionskassen delivered an investment return of 9% for the first nine months of this year and recovering markets have helped bring funding levels of private funds back up to 100%, according to consultancy firm Lusenti.

In its latest Swiss Institutional Survey, which Lusenti carries out every six months, 134 "mostly larger" funds took part and revealed while their half-year performance had been just over 3%, the third quarter estimates gave returns a significant boost.

Overseas equities contributed most to the performance in the first six months as they returned 8%.

However, private Equity and overseas real estate were the two asset classes that performed negatively with returns of -7% and -2% respectively.

The average funding level which had stood at just over 90% by the end of June was subsequently increased to 98.4% three months later, and private pensionskassen saw the best gains, achieving an average funding level of 102.4%.

Looking specifically at asset allocation, Lusenti noted there was a major increase in the take-up of Swiss equity holdings from 8.7% at the end of 2008 to 13.8% by the end of Q3, which on the one hand was down to the share price development over trecent months but also down to share purchases by large institutions.

On overseas equities the hike was less pronounced (13.1% to 15.5%) but major new investments could also be seen in domestic direct real estate as allocations rose from 8.6% to 13.8%.

At the same time, the bond element of portfolios dropped from 44.4% to 38.2%.

Lusenti also looked at SRI investments among Swiss pension funds and found 5.8% of the pensionskassen in its sample currently apply SRI criteria in some form and this percentage is estimated to grow to 8.8% only by 2019.

Public pension funds made up the largest share among SRI-applying pensionskassen - a factor which Lusenti tries to explain by arguing the executive boards of these funds include union offiicials as well as political representatives who bring certain dynamics to decisions on the asset allocation.

Most of the funds applying SRI criteria did so with Swiss investments, particularly in relation to equity, direct real estate and bonds.

If you have any comments you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email julie.henderson@ipe.com

 

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