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Pension funds benefit from strong financial markets

Pension funds benefit from strong financial markets

Swiss pension funds can look forward to a successful year in 2023. After a significant negative performance in the previous year, pension funds have now benefited from strong financial markets, which lifted central banks into high spirits, especially in the last quarter.

2023 was a successful year for pension funds.Photo: Keystone

According to pension fund monitor Swisscanto on Friday, the year-end rise resulted in an average return of 6.2 percent for 2023. In the fourth quarter alone there was an increase of about 2.5 percent. In the previous year, 2022, pension funds suffered a negative performance of about 12 percent.

Coverage levels have improved

It is said that coverage rates have continued to improve in line with the positive development. For private pension funds, it reached 114.9 percent, after 105.6 percent in the previous year and 112.6 in the previous quarter. The minor setback from the third quarter is “already history again” and the upward trend continues, according to experts. Overall, over the past 10 years, the numbers have once again approached their all-time best levels.

At 49.1 percent, nearly half of private pension funds now have a coverage ratio of more than 115 percent. Overall, private sector funds in particular benefited from the strength of the last quarter in financial markets; The rise in fully capitalized public sector funds was somewhat more modest. But here too, the percentage of funds with a coverage ratio of more than 115% increased from 13.5% in the third quarter to 16.2% at the end of 2023.

Bonds and stocks are strong

Looking at individual asset classes, global stocks in particular rose 11.4 percent year-on-year. Swiss stocks (+6.1%) and Swiss franc bonds (+7.4%) were also among the best performing stocks. Real estate in Switzerland also performed positively at 3.2 percent.

But 2023 was not the year of raw materials, he said. There is a negative development of 16.3 percent here. Global bonds without currency hedging also fell by 3.9 percent. With hedging, there was an increase of 2.5 percent. Meanwhile, hedge funds fell 1.0 percent. (saw/sda/awp)

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