SWITZERLAND – Higher stock markets have improved the average coverage ratio for public and private pension funds in Switzerland from 100% to 104% but pension funds are under a lot of pressure, according to a new survey.
Asset manager Swissca’s annual ‘Umfrage’, or questionnaire, which polled 180 pension institutions managing a total of 185 billion francs (120 billion euros), found a more “relaxed” investment environment in the country.
Forty per cent of the public pension funds have a coverage ratio of over 100%, the asset manager also said.
But, in spite of the improvement, reserve requirements were only “partly complied with”.
And the survey also shows that “under what heavy pressure pension funds are to adapt to new law handicaps, demographic developments and political demands pension funds”.
“The survey manages to make a considerable contribution so_that the much demanded higher transparency in the shape of an easier definition of position is of use to pension funds too,” Swissca said.
The cut in the rate for exchanging accumulated capital into returns and compensation for inflation, which was recently passed by parliament, “does not reflect the biometric needs anymore”.
Pension institutions have already embarked on “drastic” cuts on non-obligatory contributions. On average the exchange rate for men was cut from 6.9% to 6.4% and for women from 6.8% to 6.4%.
“Obligatory and non–obligatory pension provisions begin to drift from one another,” Swissca said. “The survey shows law-makers there is need for action.”