Credit Suisse on May 2 published a study entitled “Swiss pension funds survey – Low interest rates and demographics as the main challenges”.

Starting point of the study, written by Credit Suisse’s economists and strategic investment consultants for institutional clients, are the results of a survey among almost 200 pension funds. Based on the survey results, the authors estimate that in 2015, some CHF 5.3 billion of second-pillar funds were redistributed from active insured persons to pension recipients. In this context, the reduction of the minimum conversion rate that is envisaged in the “Old-age Provision 2020” reform is a welcome measure, although many pension funds believe that there is a need for further political action. In particular, they are demanding a de-politicization of the minimum conversion rate. Most pension funds see the low interest rate environment as their greatest challenge. As a reaction to this situation, many of them have adapted their investment strategy, favoring real assets over bonds. Using model calculations, the authors of the study show that the technical interest rate is likely to rise only negligibly in the coming years, if at all, according to Credit Suisse.

At the end of 2016, Credit Suisse carried out a survey of almost 200 Swiss pension funds on current topics pertaining to the occupational pension system. As was already the case in the most recent Credit Suisse pension fund surveys in 2011 and 2014, the continuing low interest rate environment is cited most often as a challenge. For 93% of those surveyed, this represents one of the three main problems, and over half even see it as their greatest challenge. For almost 60%, the minimum conversion rate being too high and demographic change rank among the top three concerns. “Increasing life expectancy and the pressure on returns are forcing pension funds to take measures both in terms of benefits and investment,” explains Beat Zeller, Head of Pension Funds & Corporate Investors at Credit Suisse.

Full Content: The Financial

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