Assets in Swiss pension funds grew to around CHF1.2trn (€1.2trn) in 2021 on the back of a CHF85bn return on capital invested, according to a report by the country’s asset management association AMAS.
On average, the Pensionskassen posted returns on investments of 8% last year, the second-best result to date. In 2019 pension funds’ returns on investments added CHF95bn in assets, the best result to date, and CHF43.5bn in 2020.
Typically, at the end of 2021 pension funds had 31% of their assets invested in equities, 32% in bonds, 22% in real estate, 12% in alternatives and other investments, and 3% in cash.
According to the report, with a more risky asset allocation strategy – for example 40% equities, 20% bonds, 17% real estate, 20% alternative investments and 3% cash – annual returns for Pensionskassen since 2006 would have been 0.45% higher per year, generating an additional CHF69bn over this period of time.
In the last five years, however, returns on invested capital contributed with more than CHF250bn to the increase of pension funds’ assets, and over the last 10 years with CHF430bn.
Over the past 15 years, the report said, all asset classes have generated positive returns. Swiss equities have generated 6.96%, foreign equities 5.41%, Swiss bonds 2.01%, foreign currency bonds 1.96%, real estate 5.64%, and alternative and other investments 5.50%, the report added.
Contributions from employers amounted to CHF30bn and from employees to CHF21bn in 2021, according to figures by the Swiss occupational pension supervisory commission OAK, AMAS, and the Federal Statistical Office.
The number of active members of Swiss pension funds is currently 4.6 million, with an additional 1 million retirees, meaning that each member holds on average close to CHF214,000 in pension assets in Switzerland, or around CHF133,000 per resident.
This number is higher than CHF110,606 per member held in pension assets in the Netherlands, CHF98,328 in Australia, CHF95,963 in the US, and CHF80,650 in Canada, according to the Thinking Ahead Institute and AMAS.
Last year, each pension fund member benefited from the increase in assets by CHF15,180 on average, based on a return of CHF85bn.