Positive market developments and rising discount rates helped Swiss Pensionskassen improve their funding levels by approximately 300 basis points, consultancies estimated.

PKSBB, the CHF15bn (€12bn) pension fund of Swiss federal railways SBB, fared particularly well, reporting a funding level just above the 100%-mark for the first time in more than a decade.

Its 101.8% funding level marked an increase of 270bps year on year and means that, for 2014, its participants will not have to pay any additional contributions as part of a recovery plan.

Meanwhile, average funding levels at Swiss pension funds improved to 102.9% for pension funds in general, according to Towers Watson, or even to as high as 110.8% for private pension funds, according to Swisscanto.

The Towers Watson Pension Index calculated that the funding level increased by 400bps quarter on quarter from 99.1% as reported per end-September 2013, while Swisscanto worked out an improvement of 320bps for private pension funds and 270bps for public pension funds to 102.7% year on year.

A slight increase in the discount rate also helped lower liabilities and improve funding levels in turn.

Within the Towers Watson sample, the discount rate improved by 16bps, while liabilities shrank by 2%.

Swisscanto reported a 6.1% average rate of return for its sample, similar to the one published by Towers Watson at 6.2%.

UBS calculated a similar average return at 5.89%, but the Credit Suisse index showed a slightly lower average return at 5.75%.

The PKSBB is at the lower end of the spectrum, with a return of 5.4% for 2013.

In a statement, the pension fund stressed that, despite the recent improvement of its funding levels, its financial buffers were still wanting.

The PKSBB is one of the funds currently looking to introduce variable pensions for future pensioners to ensure sustainable, long-term financing. 

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