Performance, Funding Ratio and Interest Rate

Performance provides information on investment success, as represented by interest income, dividends and changes in the valuation of individual investments. It measures them in relation to assets to enable comparison with reference values such as benchmarks and sector indices.

The funding ratio measures the Pension Fund’s assets in relation to its actuarial pension liabilities. If the funding ratio is below 100%, the Pension Fund has a funding deficiency, and if it is above 100%, it has a funding surplus. A funding ratio of exactly 100% means that all the Pension Fund’s obligations can be met. If the GastroSocial Pension Fund can generate a funding surplus, it can build up fluctuation reserves, thus helping to cushion the fluctuations on the financial markets.

The BVG minimum interest rate is the minimum interest that has to be paid on pension assets by Swiss pension funds. This minimum interest rate is usually reviewed in autumn by the Federal Council and adjusted for the next year, if necessary. At the end of the year, the Board of Trustees then determines the final retroactive interest rate for the retirement assets based on the performance that was achieved as well as the provisional interest rate for the next year.

Performance:

3.00%

(Benchmark: 1.99%)

Funding ratio:

123.3%

  

per 31/03/2021

The investment environment in March was overshadowed by accelerating progress with the rollout of COVID vaccinations, the spreading of more contagious mutations of the virus, the unaltered relaxed monetary policy, the extremely large-scale fiscal support in the US, rising concerns about inflation, a booming industry battling with logistical bottlenecks and rising prices for raw materials, and intensifying signs of an increased appetite for consumption after months of high savings rates.
In contrast to the previous two months, equity markets mostly trended positively throughout March, while yields on US government bonds rose noticeably again and strengthened the US dollar.

Thanks to our broadly diversified strategy, tactical positioning and implementation focused on the most diverse of yield contributions, we posted a good performance in absolute terms as well as relative to the benchmark and ended the quarter successfully. Equities provided the main contribution, while bonds made only a minimally positive contribution, even though their performance was substantially above the benchmark.

The technical interest rate i is 2.75%.

The technical interest rate serves to measure future pension liabilities. It determines how much capital is required for the pension benefits that have been promised. The expected financial market developments have a strong impact on the interest rate level. The technical interest rate should not be confused with the rate of interest on retirement assets or the BVG minimum interest rate.

Quarter Performance accumulated Funding ratio
1.2021 +3.00% 123.3%
2.2021    
3.2021    
4.2021    

 

Interest rates 2020/2021  

Final interest rates for Pension Fund assets for 2020

(mandatory and extra-mandatory assets)

1.50%

Provisional interest rate for 2021

(mandatory and extra-mandatroy assets)

1.00%

BVG minimum interest for 2020

1.00%

The Board of Trustees will determine the final interest rates for 2021 in November 2021.

Historical performance, funding ratio and interest rate data

Performance

Average performance 2011 – 2020 = 4.74%

Funding ratio

Average funding ratio 2011 – 2020 = 114.5%

Interest rates

Average interest rate 2011 – 2020 =  1.76%

(The above figures are not guaranteed!)