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Swiss pensions shift to equities and property

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SWITZERLAND - Swiss pensionskassen made a definite shift back into equities in the second quarter of this year alongside a record level of real estate investments, new figures suggest.

Credit Suisse's latest "Pensionskassenindex" indicated pension funds' exposure to foreign equities increased by 1.6 percentage points in the second quarter of this year, to reach 14%, although this is down compared with 15.5% in Q2 2008.  (See earlier IPE story: Swiss pensionskassen return 3.3% in H1

Swiss equity investments amounted to 11.8% of portfolio holdings - rising from 11% in the first quarter but still down on 13.1% a year earlier.

Real estate exposure also reached a new record level of 19.1% - up from 18.8% at the end of March and 17.4% at end of June 2008.

Bonds, meanwhile, dropped back from the 39.2% record holding in the first quarter to 37.5%. The average real estate holding among Swiss pension funds a year ago was 36.6%.

Confidence in alternative investments continued its decline, however, as holdings dropped from the record level of 5.1% in Q3 2008 to reach 4.2%.

Credit Suisse, which produces its monthly index based on figures from approximately 100 Swiss pensionskassen, reported its own firm saw asset outflows of CHF4.1bn (€2.7bn) from its asset management division in the second quarter.

These outflows were comprised of CHF1.7bn outflows in multi-asset solutions, CHF1.4bn in alternative investment strategies, CHF900m in traditional investment strategies and CHF100m in equity participations and joint ventures.

Nevertheless, the asset manager generated a positive income of CHF14m in the asset management division in the second quarter, compared to a loss of CHF469m in the previous quarter, and saw a rise in assets under management from CHF1.12trn to CHF1.17trn.

Elsewhere, Vita, the multi-employer pension fund and one of the largest Swiss pensionskassen, has now announced it will not need to raise contributions in order to get back to full funding. (See earlier IPE-story: CHF350m needed as special payment from Swiss employers)

The CHF7bn fund said it will cut indexation on some pensions, mainly those which are above the mandatory second pillar level, for a certain period and this should suffice to bring it back to full funding over the next years.

The Vita fund returned -11.13% last year, which brought its funding level down to 87.4% compared with 101.3% in 2007.

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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