14/01/2013
Performance of pension funds tops 6% in 2012
Swiss pension funds saw a spike in their returns last year. Their average returns were 6.3%, following a 0% year in 2011, the Swiss association of retirement planning associations (ASIP) announced on 11 January. The evaluation of average returns for pension funds is based on asset allocations by participants as of 30 June 2012, extrapolated to the end of December 2012. For the second half of 2012, returns totalled 2.7%. This return shows that the financial situation for pension funds will improve slightly in the short term. However, a statement from the association warns, “this positive development should not create any illusions: complex interactions between various factors, such as the legal retirement age, the minimal required conversion rate, and returns earned in the short term, do not function completely independently of one another. At many pension funds, evaluation of pension liabilities is based on a relatively high technical interest rate – 3.5% – which necessitates a high return objective.” Equities performed better than bonds thanks to sustained pressure on interest rates. In first quarter, the proportion of Swiss equities as a part of investments was about 10% on average, while foreign equities were nearly 21%. In the past twelve years, since the first publication of comparison of results by the ASIP, median annual returns are 1.3%. This value is well below the necessary returns, and is below the minimal interest rate prescibed for this period, the association points out.
