The share of Swiss underfunded pension funds has shrunk to 7% at the end of last year, from 16% at the end of 2022, as a result of positive returns on investments, according to a report on the financial situation of pension funds in 2023, published this week by the occupational pension supervisory commission OAK BV.

Gains on bond and equity investments mainly delivered positive results in 2023, partially compensating for the losses accumulated in the previous year, it said.

Swiss pension funds without a state guarantee returned on average 5.2% last year, compared with -9.2% in 2022, with funding ratios improving for those schemes to an average of 110.3% in 2023 (previous year 107.0%), according to the report.

It also showed that 93% of the pension funds without a state guarantee had a funding ratio of at least 100% at the end of last year, compared with 84% the prior year. Currently, only 9% (previous year 29%) of the pension funds without a state guarantee have a “rather high or high risk” in terms of funding ratio, the report added.

Pension funds with a state guarantee returned 5.2% in 2023, compared with -8.2% in 2022, with funding ratios that also improved to 84.2%, from 81.3% in 2022, OAK BV said. According to the report, 20% of pension funds with a state guarantee, many partially funded, were fully funded last year, compared with only 6% in 2022.

The financial situation Swiss pension funds has clearly improved over the past 12 years, OAK BV has found.

Pension funds have taken important measures during the years that led to a more stable financial situation, it continued.

These measures include supplementary financing of pension obligations, that can now be largely be financed without relying on the redistribution mechanism.

Moreover, the majority of pension institutions have built up sufficient reserves to fend off the impact of market volatility, OAK said.

The occupational pension regulator warned, however, of rising geopolitical tensions this year, but added that the majority of Swiss pension funds are prepared to face uncertainties.

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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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