A higher allocation to real assets has prevented Migros Pensionskasse (MPK), the pension fund for the Swiss retailer, from achieving higher returns last year, the scheme said in a statement.

Especially foreign real estate holdings experienced a valuation correction of 8.3% in 2023 (compared to 15.3% the previous year), the scheme said, adding that it closed the past fiscal year with a positive income of CHF932.9m (€989.5m).

MPK’s return 3.7% in 2023 is above its target return of 2.1%, said chief executive officer Christoph Ryter.

A higher allocation to real estate and infrastructure helped MPK to partially compensate for high losses on equities and nominal value investments in 2022.

Ryter added: “Migros Pensionskasse will review its strategy over the course of the year, with the help of an ALM [asset and liability management] analysis and, if necessary, make adjustments at the beginning of 2025. Such a study is carried out every four years.”

Signs of a slow down in terms of returns emerged during the course of last year, with returns below its benchmark. The scheme returned 0.0% as of the end of October, against a 0.4% benchmark.

With real estate investments making up the largest share of assets in its portfolio at CHF10.81bn – Migros returned 7.9% as of the end of October, below the 8.3% benchmark, while posting 1.2% returns on equites, above its 0.8% benchmark, it said.

Overall, assets under manager increased last year by CHF600m to CHF28.2bn, the scheme added in the statement. MPK invests 32.8% of total assets in nominal value investments, 27.5% in equities, 37.7% in real estate, and 2 % in gold.

Rising interest rates led to increasing interest rate valuations for pension obligations from 1.5% to 2%, with a positive impact on its funding ratio, which improved from 124.5% in 2022 to 129.4% last year, it said, adding that it has free funds at its disposal.

Free funds and the special effect of the adjustment of interest rate valuations for pension obligations led the scheme to increase pension benefits by 5% this year, and to increase the interest rate on savings to 3.75%.

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Luigi is IPE's Berlin-based DACH correspondent. His coverage includes regulation and the latest pensions and investments trends, and, being a native Italian, he also covers Italy’s pensions market. He has reported from Italy and Germany on international politics and business for European and US publications including USA Today, Bloomberg BNA and for the investigative magazine L’Espresso. He was previously Germany correspondent for Mergermarket covering M&A.View full Profile

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