SWITZERLAND - The latest Swisscanto survey has shown that only half of Swiss pension funds achieved a positive return last year.

In total, 326 Pensionkassen managing more than CHF426bn (€355bn) took part in the survey this year, Swisscanto said.

The average performance for 2011 stood at -0.32%, with returns ranging from -2.5% to 2.5%.

Nearly half of the surveyed pension funds achieved a positive return.

According to the survey, funding levels fell from 106% to 103% for private funds, but  extrapolations published by Swisscanto in April suggest an improvement over the first quarter.

Funding at public schemes aiming for full funding - as opposed to those having chosen the partial-funding model backed by state guarantees - fell from 98% to 95% in 2011.

Because of new regulations requiring public funds to achieve full funding within the next 10 years, the number of schemes having introduced recovery measures increased from 34% to 38% year on year, according to Swisscanto.

Asked about their inflation hedge of choice, 72% of respondents named real estate, 60% equities, 40% commodities, 37% cash and 31% gold.

Inflation-linked bonds and government bonds "came last and are therefore only playing a marginal role", Swisscanto said.

In other news, Mercer Switzerland has observed that most Swiss Pensionskassen have been unaffected by the interest-rate distortions plaguing pension fund recoveries in countries such as the Netherlands. 

Christian Bodmer, head of investment consulting, told IPE: "In Switzerland, liabilities are calculated using a stable discount rate, which, according to recommendations by Pensionskassen experts, should currently be between 3% and 3.5%."

Some Pensionskassen, however, are still using discount rates as high as 4%.

Bodmer added that the only pension schemes affected by interest rate volatility were those of companies reporting under IAS or US GAAP accounting rules.

Lastly, at a panel discussion hosted by pension service provider B+B Vorsorge, executives of Swiss collective schemes debated the future of asset allocation.

Walter Kohler, managing director of the CHF3bn PAT-BVG Personalvorsorgestiftung der Ärzte und Tierärzte, a fund for doctors and vets, warned that there might already be bubbles in certain asset classes - particularly real investments - as many pension funds were "rushing in".

But Gisela Basler, managing director of the CHF1.8bn Comunitas Vorsorgestiftung of the Swiss trade federation, said bubbles in sectors such as real estate would prove dangerous for investors that had built up exposure quickly and recently, but not for those with a long-established history in those investments.

On the question of introducing defined contribution elements to the Swiss system, such as a guaranteed minimum pension with variable bonus payments, Kohler said the debate was "dangerous" and that participants "might as well save for themselves" if such features were introduced.

He also argued that the existing system had already proven itself and warned against changing with it.

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