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A good return, higher coverage ratios and better interest rates. This is the conclusion of the supervision of occupational pensions.
What are the main results of the supervisory supervision? Compared to the previous year was 2023 will be a good year for pension funds. This is what the Supervisory Commission for Occupational Pensions (OAK BV) reported at the media conference to assess the financial situation of the pension institutions. The reason was the positive growth on the global stock markets, which gave pension funds an average return of 5.2 percent. The good performance of the invested pension capital was also reflected in the coverage ratio. The vast majority of funds were able to increase their coverage ratio again after the poor investment year of 2022. The interest on retirement savings rose from 1.9 to 2.31 percent compared to the previous year.
Who is OAK BV?
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The Supervisory Commission for Occupational Pensions (OAK BV) is an independent supervisory authority whose aim is to protect the financial interests of those insured by occupational pensions. It ensures uniform supervisory practices throughout Switzerland by supervising all investment foundations, the security fund and the safety net.
What about redistribution? For three years there has been virtually no redistribution to the detriment of those in employment. In 2023 there was even an increase in favor of active insured persons. This is due to the additional financing by the pension funds and the fact that the conversion rates have been reduced, says OAK BV President Vera Kupper Staub. The additional financing was paid primarily by employees through the lower interest rate on their pension capital.
What happens to the “new surplus” money? The pension funds decide what happens with the money. According to OAK BV President Vera Kupper Staub, they try to treat all groups of insured persons fairly. The pension expert Oliver Töpfer from the consulting company ppcmetrics also points out the importance of reserves. In order to be able to take on future investment risks, the surplus cannot simply be distributed in full.
Why did this redistribution happen in the past? For years, pensioners have been cross-subsidized by those actively insured. If you add up the annual amounts, almost 45 billion francs have been redistributed from working people to pensioners in the last ten years. The redistribution of billions of euros was necessary because, according to the supervisory authority, the conversion rates at pension funds were too high in the past.
What will happen next in the next few years? From the point of view of the OAK BV President, the pension funds are currently on a stable footing in terms of redistribution. However, pension expert Oliver Töpfer points out that this depends heavily on the development of the financial markets. If good investment returns continued to be achieved, redistribution could also be prevented in the future. However, if bad years were to come again, this would be to the detriment of the insured in the form of lower interest rates.