The financial situation of the pension funds has improved. They achieved an average return of +4.6% on pension assets in the first half of 2023. As a result, the funding ratios have increased to 111.3% as of June 30, 2023.

Pension funds in Switzerland again achieved positive returns on their investments in the first half of 2023. The average performance since the beginning of the year amounts to +4.6% according to the projections of the Occupational Pension Supervisory Commission (OPSC). This applies to all investment categories. Equities (+10.1%) and alternative investments (+7.0%) performed particularly well, followed by bonds (+2.4%), infrastructure investments (+1.2%) and real estate (+0.5%).

Number of pension schemes in underfunding has decreased

As a result of the positive performance, the average capital-weighted funding ratio rose from 107.0% at the end of 2022 to 111.3% as of June 30, 2023. As a result, the capital-weighted proportion of Swiss pension funds with insufficient cover also fell from 16.1% at the end of 2022 to 7.3% at mid-year. If pension funds are underfunded, i.e. if their funding ratio is below 100% at the end of the year, they must take measures to return to a funding ratio of at least 100% within 5 to 7 years. The measures required for this depend on the extent and causes of the underfunding.

Risks remain

However, OPSC emphasizes that the current improvement in the situation does not allow any conclusions to be drawn about future developments in the current investment year. The financial markets are currently characterized by a high level of volatility: «Continuing inflation and thus potentially further interest rate hikes by the central banks may have a negative impact on future economic development. In addition, there are still considerable geopolitical risks.»

About the assessments of the OPSC

OPSC estimates the development of the financial situation of the pension funds in Switzerland during the year by means of monthly monitoring. Based on the annual survey on the financial situation of the pension funds, monthly projections are prepared that are based on the individual investment strategies of the pension funds and the effective development of the investment markets. The annual survey is based on data from 1'280 pension funds with pension assets of around CHF 852 billion. The monitoring is limited to pension funds without a state guarantee and without a full insurance solution.

The Occupational Pension Supervisory Commission OPSC is an independent commission of the authorities. It is financed entirely by levies and fees. The eight regional supervisory authorities at the headquarters of the respective institution are responsible for the direct supervision of the pension funds. Their overall supervision by OPSC is independent of instructions from Parliament and the Federal Council.