The Pensionskasse for the Swiss canton of Zurich (BVK) saw its rebalanced equity strategy yield CHF450m (€410m), or 1.3%, on its overall performance for 2020, said chief executive officer Thomas Schönbächler. The pension fund recorded returns of 5.7% last year.
“Once again, the consistent implementation of the strategy has paid off,” the CEO added. BVK rebalanced its investment portfolio by buying equities to profit from stock market fluctuations at the peak of the COVID-19 pandemic earlier last year.
BVK consequently profited from a gradual recovery of the equity market. The scheme’s funding ratio stood at 105.2% at the end of 2020, while it continued to apply an interest rate of 2% on pension assets.
The number of members has risen to 128,100, with the number of active insured growing at a faster pace (3.6%) compared to retirees who already receive pensions (2.5%).
The CEO explained that the fund decided to decrease the minimum annual salaries threshold to enter the fund as an insured member in the second pillar to CHF14,340.
Additionally, BVK will continue to reduce CO2 emissions within its real estate portfolio by over 70% until 2030, compared to 1990, by replacing heating energy sources or applying high sustainability standards in construction – it already reduced CO2 emissions in its property portfolio by half by 2018.
BVK has sustainability as one of its investmetn criteria – it engages with partners to ensure that labour and environmental standards, and governance principles, are observed. It took part in over 500 annual general meetings and voted against excessive management remuneration, or in favour of climate resolutions of shareholders.
Railways scheme outperforms own benchmark
PK SBB, the pension fund for Switzerland’s federal railways, outperformed its own benchmark by 0.2% in 2020 to achieve returns of 3.9%. The fund has so far published unaudited results, it said, adding that the annual report will include further information on returns on investment and the funding ratio.
The scheme has reported overall satisfaction with the result in view of the difficult global situation last year.
Interest rates, however, remain “very low”, it said. The board of trustees has therefore decided to reduce the technical interest rate from 1.5% to 1%.
The fund built up provisions last year to cushion the impact of the reduction on technical interest rates on its funding ratio, whcih stood at 108.5% at the end of 2020 compared to 105.4% the prior year.
PK SBB has 56,000 insured, including 44% who already receive pensions. It will publish further information on its 2020 annual report.
BLPK sees returns of 5.1%
Basellandschaftliche Pensionskasse (BLPK), the provider of occupational pensions for the employees of the canton of Basel-Landschaft and other affiliated employers, recorded returns of 5.1% in 2020.
The positive trajectory of its returns was the result of a “build-up” position on equity markets at the time of the March stock market crash, it said. The fund then sold part of its equity holdings in the autumn at higher prices to make a profit.
The positive trend in real estate, which was not impacted by the pandemic, the fund said, also contributed to positive returns.
The board of directors and management team at BLPK pursue a long-term, diversified investment strategy that paid off despite volatility in equity markets, it said.
BLPK oversees 50 pension schemes, all with funding ratios above 100%.