The Pension Funds Monitor is a real-time indicator of the financial position in the 2nd pillar. It provides information about the average coverage ratio and the average investment performance of Swiss pension funds. The aim of the Pension Funds Monitor, besides gaining insight on performance, is to provide an indicator that can act as a key criterion for assessing the financial situation of pension institutions.
The calculations for the Pension Funds Monitor are based on data from the Pension Funds Study of Swisscanto Pensions Ltd. published annually.
The coverage ratios of the current year are estimated and aggregated for the individual pension plan. Changes on the liabilities side are determined using the historical target returns of the previous year. If no reliable target return can be calculated, the average of the historical target returns is used. The performance of individual asset-side balance sheet items is simulated by means of index performances without deduction of asset management costs and under the assumption that no rebalancing takes place.
The result of the aggregation is the performance of the total assets. Weighted averages are, in principle, used for the estimations at the aggregated level. The weighted and the unweighted averages are given for the performance estimate: the unweighted average is the simple mean of the performance estimates at the level of the individual pension scheme.
We recognise that a consideration of the average coverage ratio alone provides only limited information. Each pension scheme must be considered based on its individual situation.
The pension schemes surveyed achieved an estimated asset-weighted yield of -3.53% in 2018, one of the weakest investment years since the 2008 financial crisis.
The reserves of the Swiss pension schemes almost halved in 2018 from 14.4% to 7.7% on average due to investment losses. Development of the coverage ratios (estimates) is as follows.
|Pension schemes||Coverage ratios 2017* in %||Coverage ratios 30/09/2018 in %||Coverage ratios 31/12/2018 in %|
|Private-law funds ||114.4||112.3||107.7|
|Public-law funds, |
|Public-law funds, partial capitalisation ||83.5 ||82.1||78.6 |
*Results of the Swiss Pension Funds Study 2018
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