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:

-3.88%

(Benchmark: -2.49%)

Funding ratio:

114.0%

  

at 31/05/2020

The investment markets continued to recover in May, their momentum largely undiminished. As in the previous month, the main drivers were advances in the fight against the pandemic, further relaxation of the restrictions and the expansion of the monetary and fiscal support measures taken. As a result, the market paid less attention to the figures from the real economy over the past two months, which were in historically low negative territory.

Our portfolio is geared towards this scenario, and the return on it therefore continued its rapid improvement. In addition, the underperformance versus our ambitious benchmark, for which some of the components are defined in absolute positive terms, was reduced.

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 11.09% 120.9%

 

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 2010 – 2019 = 4.83%

Funding ratio

Average funding ratio 2010 – 2019 = 112.8%

Interest rates

Average interest rate 2010 – 2019 =  1.81%

(The above figures are not guaranteed!)