Swiss Pensionskassen has recorded a reduction of pension assets, or reserves, set aside to fend off volatility in Q3 of 2022, as a result of losses on almost all asset classes, according to the Swisscanto Pensionskassen-Monitor published today.
Private pension funds saw their reserves decline in Q3 by an average of 3.3 percentage points to 4.6%, veering strongly from the average target of 18% at mid-year, Swisscanto said in the report.
Swiss pension schemes returned -2.6% in Q3, and -13.15% so far this year. Global bonds have lost 13.4% year-to-date, Swiss bonds -11-64%, global bonds hedged in Swiss francs -13.61%, Swiss equities -19.93%, global equity -19.71%, direct and indirect investments in Swiss real estate -6.84%, hedge funds -5.89%, while commodities was the only asset class recording positive returns of 22.62%.
Swisscanto – which analysed 475 pension schemes with assets worth CHF806bn (€813bn) – underlined that central banks’ policies on inflation and recession will likely keep market volatility high in financial markets for the rest of the year.
Funding ratios of private pension funds continued to decline, from 122.1% at the end of last year to 107.8% in H1, ending up at 104.6% in Q3. Funding ratios of fully funded public pension funds fell from 112.9% at the end of 2021, to 99.3% in H1 and 95.9% in Q3, while for partially funded public pension funds funding ratios went down from 90.8% in 2021 to 79.2% in Q3.
According to the Swisscanto report, only 18.1% of private pension funds and 8.3% of public pension funds have a funding ratio exceeding 115% as of September.
The report also showed that 19.4% of private pension funds, 52.8% of fully funded public pension funds and 87.5% of partially funded pension funds have recorded an underfunding position.
The Swiss occupational pension supervisory commission – OAK BV – also said in a note that a number of pension funds are expected to end up underfunded at the end of the year as a result of market volatility and negative returns.
Negative returns on equities hit Swiss fund market
The negative performance on equity markets in Q3 led to a drop in assets in Swiss funds for the first nine months of the year to CHF1.27trn, from CHF1.51trn at the end of 2021, according to figures published today by the country’s asset management association AMAS.
Equity funds posted the strongest negative returns this year (-23.1%), followed by bonds funds (-11.5%), mixed-asset funds (-11.3%), and alternative investments (-5.2%), while real estate funds recorded positive returns of 4.1% and commodity funds of 3.5% year-to-date.
The Swiss fund market recorded a negative performance overall so far this year of -15.3% and net outflows of CHF9.47bn.
The funds attracted instead CHF13.94bn for sustainable investments so far this year, but sustainable funds still recorded a negative performance of -16.9% this year, with assets declining from CHF368.87bn in December last year to CHF 320.33 in Q3 this year, according to the report.
UBS Asset Management is leading among the largest providers in the Swiss fund market with a market share of 25.4%, followed by Credit Suisse Asset Management with 14.7%, Swisscanto with 9.4%, BlackRock with 7.4%, Pictet with 5.1%, and Vontobel with 2.7%.
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