SWITZERLAND - The CHF15bn (€10.2bn) Pensionskasse of the Swiss retailer Migros is looking to further diversify its equity portfolio internationally, after delivering a return of 10.9% last year.

The Migros Pensionskasse (MPK) is among those Swiss pension funds achieving average pension performance, according to its provisional returns calculations for 2009. (See earlier IPE story: One in four Swiss plans are underfunded - Swisscanto) 

At the end of 2009, the 80,000-member fund was back to full funding with 103.8% of assets required, having dropped to 97.1% in 2008 from its buffer of 114.9% in 2007.

“The ALM study, which was concluded last year, found that the fund can stick to its current strategic asset allocation with a few changes,” said Christoph Ryter, who became the new head of MPK in January. (See earlier IPE story: Swiss Alcan pension secures recovery plan)

What will change this year is a strengthening of the core-satellite approach the fund established earlier.

“While 85% of the portfolio will be in core investments, 15% will be satellite investments and the international diversification of the equity portfolio will continue,” said Ryter.

The fund’s equity quota was raised back over its strategic minimum of 26% last year, both through market recovery as well as through “moderate purchases”.

Ryter, who is also head of the Swiss pension fund association ASIP, pointed out that “diversification was still the best all-weather strategy” in investments.

However, he admitted that many funds’ buffers, which had built until 2007, had still now been enough to avoid a major deficit in 2008.

He is therefore calling on Pensionskassen to check whether they can still meet their liabilities in 2010, given the low interest rate environment.

“If not, changes to the level of benefits, the financing of the scheme or the investment strategy might be necessary,” added Ryter.

If you have any comments you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email julie.henderson@ipe.com

 

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