Swiss pension deficits up slightly in 2010, but figures show calm before storm
Friday, November 11, 2011
Swiss pension deficits rose only slightly in 2010 according to a comprehensive analysis from the Swiss National Statistics' Authority
All the country's funds were together some 35.1 billion Swiss francs (£20.7bn) short of matching combined pension liabilities of 622.5 billion Swiss francs (£430bn) at the end of the last calendar year. That is only a 500 million francs larger shortfall than in 2009.
A press release accompanying the results boasted that Swiss pension funds "have shown themselves to be stable" in 2010.
While the overall message was one of steady continuity from 2009 to 2010, some trends have emerged, suggesting that Swiss funds are rapidly embracing diversification in the hunt for returns.
Foreign real estate holdings were up a huge 17.1% on the previous year across all schemes, and domestic real estate assets rose 5.6% in total.
These results come just days after the president of the Swiss pension fund association praised the value of real estate in boosting returns at his own award-winning pension fund in recent years.
Alternative asset holdings were also up 13% across the board and foreign equities climbed 11.8%. This suggests that Swiss funds, well known for taking active portfolio changes,
The figures also point to further consolidation in the Swiss pension industry. Despite a 1.8% rise in the total number of pension fund members (to 3.7 million), the number of funds dropped from 2351 to 2270 throughout 2010.
The net returns from all Swiss pension fund investments added up to 19.5 billion francs (£13.5bn) in 2010. This is almost two-thirds less than in 2009, and despite the appearance that funds were stabilising after the financial crisis, negative returns in the first half of 2011 have since strained many Swiss pension funds.
Several funds have attempted to relieve recent funding problems by changes to their retirement ages and benefit levels. The Swiss government also recently lowered the minimum interest rate that Swiss funds can promise to their members to 1.5% per year to reflect a weakening future investment outlook.
10.11.2011
dbillingham@wilmington.co.uk
