Pension funds: OAK BV observes deterioration in financial situation
The Superintendence Commission observes sharp declines in the coverage ratios of pension funds. The returns through real estate have collapsed to -9.5 %.
The financial situation of Swiss pension funds has "significantly deteriorated" in the first half of 2022. This is the verdict of the Higher Supervisory Commission for Occupational Pension Plans (OAK BV). Inflationary pressures and interest rate rises as well as geopolitical uncertainties resulted in declines in almost all investment categories. According to OAK projections, the average funding ratio of pension funds has slumped from 118.5% to 103.4% since the beginning of the year. However, the Commission points out that its projections tend to overestimate the deterioration, as the significant rise in interest rates is not reflected in the valuation of the obligations.
According to the OAK, pension funds are experiencing negative returns in almost all asset classes.. After a very high average net asset return of 8.0 % for 2021, the average return in the first half of the year was -12.3%. The sharpest declines were seen in the asset classes equities (-17.4%), bonds (-10.1%), real estate (-9.5%) and alternative investments (-15.4%). In contrast, the asset classes liquidity (-0.4%) and infrastructure (+1.2%) were able to more or less maintain their level. (aw)
