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:

10.74%

(Benchmark: 9.89%)

Funding ratio:

124.3%

  

at 30/11/2019

In a relatively calm market environment with little political turbulence and increasing signs of the global economy bottoming out, the equity markets were able to record further gains. With our portfolio geared towards moderate growth, we achieved a cumulative return of 10.74% and further increased our lead over the benchmark. The largest contribution to this performance came from the equity segments and Swiss listed real-estate investments.

After a difficult fourth quarter in 2018, the investment markets started the new year full of optimism. Despite a politically induced period of uncertainty and the continued slowdown in global economic growth, they have managed to maintain this momentum so far. By the end of October 2019, we earned a yield of 9.44% with our broadly diversified portfolio focusing on moderate growth, outperforming both our benachmark and the Pictet BVG-25 2015 Index. Together with the good financial situation of the GastroSocial Pension Fund, this allows us to pay 2.35% interest on the mandatory as well as extra-mandatory pension fund assets for 2019. That is 1.35 percentage points more the the minimum interest rate of 1% prescribed by the Federal Council.

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
1.2019 5.28% 120.3%
2.2019 7.28% 121.6%
3.2019 8.94% 122.9%
4.2019    

 

Interest rates 2019/2020  

Final interest rates for Pension Fund assets for 2019

(mandatory and extra-mandatory assets)

2.35%

Provisional interest rate for 2020

(mandatory and extra-mandatroy assets)

1.00%

BVG minimum interest for 2019

1.00%

The Board of Trustees will determine the final interest rates for 2020 in November 2020.

Historical performance, funding ratio and interest rate data

Performance

Average performance 2009 – 2018 = 4.74%

Funding ratio

Average funding ratio 2009 – 2018 = 110.9%

Interest rates

Average interest rate 2010 – 2019 =  1.81%

(The above figures are not guaranteed!)