Swiss pension schemes recorded an increase in assets under management (AUM) during the past financial year thanks to positive equity market returns.
PK CFF – the pension fund of the Swiss federal railways – had assets under management of 19.48 billion francs (19 billion euros) at the end of December last year, compared to 18.93 billion francs at the end of the previous year, according to the latest pension fund report. financial statement.
It generated a 4.2% return on assets last year, compared to 3.9% in 2020, 0.2 percentage points above its benchmark, thanks to positive market developments capital throughout the year and the Swiss Market Index (SMI) reaching a new all-time high, it said.
Net asset allocation income was CHF 783 million in 2021, compared to CHF 707 million in 2020.
Its funding ratio rose from 108.5% in 2020 to 112.4% in 2021, the fund said. The number of active members has increased year on year to reach 30,239.
Not only equities, but also equity-like REITs (real estate investment trusts) and private equity, which posted record profits last year, benefited from the extremely positive overall stock market developments outside of China, added PK SBB in the financial statements explaining the results.
Overall, pension fund stocks (2.87%), real estate (1.08%) and alternative investments (0.99%) posted positive returns over the past financial year , while fixed income investments had negative returns of -0.59% and cash of -0-01%. .
At the end of last year, PK SBB invested 42.8% of its assets in Swiss fixed income securities, 19.8% in foreign currency bonds, 4.9% in Swiss equities, 11% in foreign equities, 12% in real estate, 5.7% in alternatives – including infrastructure, private equity and insurance-related investments – and 3.8% in cash.
It reduced its exposure to foreign equities by 1% in favor of private equity, which rose to 4% in the portfolio.
In addition, PK SBB aims to reduce its CO emissions2 by 30% against its benchmark index by the end of 2022, extending its sustainability policy to direct investments in real estate in Switzerland and mortgages.
At the same time, the total assets of the pension fund of the canton of Vaud, CPEV, increased from 14.3 billion francs in 2020 to 15.5 billion francs in 2021. Its investment strategy generated a net return of 8 .6% last year, compared to 5% the previous year, with equities and private equity contributing mainly to positive returns, while bonds delivered a negative performance.
At the end of last year, the CPEV allocated 3.3% of its assets to cash, 5.8% to bonds denominated in Swiss francs, 5.1% to government bonds, 2.7% to bonds 1.5% high yield bonds, 4.2% emerging markets (EM), 13.6% Swiss equities, 13.5% developed market equities, 4.5% EM equities , 5% in real estate securities, 22.6% in direct and indirect Swiss real estate, 0.1% in alternatives, 6.1% in private placements, 4.3% in convertible bonds, 3% in foreign indirect real estate, 1.9% to raw materials, 2.6% to infrastructure and 0.4% to currency hedging.
The CPEV aims to reach a funding rate of 80% in 2052, compared to 75.8% currently, and it has postponed the establishment of a new pension scheme to January 1, 2025 from January 1, 2023.
Under the new pension scheme, the retirement age will increase by two years while maintaining a maximum level of pensions in defined benefit schemes of 60% of the annual salary of future retirees.