[ad_1]
The Complementa study shows for the first time the extent of the damage the virus has caused to pension funds. The capital buffer created last year was completely depleted in late April.
How safe are our pension funds? In the first four months of the year, pension funds in Switzerland recorded less than 3.9 percent in their investments. The coverage ratio fell on average from 4.9 to 103 percent. The coverage ratio shows whether a pension fund can meet all benefit obligations.
That is still good enough, because a pension fund generally only becomes a case of restructuring with a coverage ratio of 90 percent. Only then would employers and employees have to inject money together to stabilize the fund. We are still a long way from that. There are only a few cash registers that have run out of funds.
What led to the decrease in the coverage ratio? The fall in share prices was primarily responsible for this. I can use the swiss blue chip swap example to demonstrate this. February 24, The link opens in a new window The SMI reached a maximum of 11,270 points, today it is around 9,650 points. The SMI fell by almost 15 percent in just two months.
Pension funds can hold up to 50 percent of their assets in stocks. The average turnout is currently 31 percent. Virtually all Swiss pension funds are invested in SMI securities. However, the second pillar invests every second franc abroad, largely covering currency risks. This has stabilized cash registers despite the stock market crash.
How can pension funds generate returns? Interest rates are still very low in the financial market. Bonds that are considered safe, like Swiss federal bonds, bear negative interest and no longer generate income. Therefore, our pension funds depend on the operation of the stock markets to generate profits. In addition to fixed-interest investments, alternative investments such as hedge funds or real estate, certain pension funds hold shares of up to 40 percent.
What does the crisis mean for the insured? Pension funds could come under increased pressure. With the increasing payment difficulties of companies, employers’ contributions are at risk. This is particularly the case in individual sectors where there has been a total blockade in recent weeks. At the same time, health insurance companies report an increase in cases of mental disability, which will put an additional burden on pension funds.
As interest rates remain low and life expectancy increases, health insurance funds are forced to lower the conversion rate. With an average of 5.53 percent, the conversion rate in 2020 will be 0.1 percentage points lower than in the previous year, which means lower pensions for retiring employees.
