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(KUE / AWP) In 2017, Swiss public limited companies better covered their pension obligations than a year earlier. This is the result of a study by consulting firm Willis Towers Watson, which was released on Wednesday. As a result, the pension obligations of the 29 largest Swiss companies included in the Swiss Leader Index (SLI) fell by 1.7% or CHF 3.6 billion. The watch manufacturer Swatch Group is not included in the study. However, plan assets to hedge these bonds increased by 0.4% or CHF 0.9 billion.
The average coverage rate of SLI companies rose from 80% to 85%. This was due to accounting changes and risk reduction. "Swiss companies are currently well positioned," said Stephen Wildner, retirement manager at Willis Towers Watson. Experts estimate a range of 80% to 90%.
S deviations Swiss Pension Funds
Nearly all SLI companies (95%) account for IFRS and US GAAP according to international accounting standards this also formed the basis of the study. As a result, all defined benefit pension plans in Switzerland and abroad must be used to calculate the hedge situation.
Willis Towers Watson's calculations differ from those of the Swiss pension funds that publish FER26 under Swiss GAAP. Swisscanto announced in May an average coverage rate of just under 114% for Swiss companies.
Book profits boost returns
According to calculations by Willis Towers Watson, Swiss pension funds generated a return of around 7%. 8% vs. 7.1% in 2016. However, this is also attributable to the recorded increases in bond prices – prices are still inversely proportional to paper yield. The current market developments, in turn, raise fears that it will no longer be possible to achieve such returns in the future.
Swiss banks have above-average levels of coverage. This gives Credit Suisse a value of 109.4% and UBS 108.3%. They are only surpassed by Vifor with 111.7%. Wildner explains the overlap of banks with capital preservation regulations that institutions must follow
Comparable coverage in the United States
Compared to other countries, Swiss companies are well represented in terms of coverage, as the 39, says Wildner. They are roughly equal to US companies whose coverage rate has gone from 82% to 87% according to the Willis Towers Watson Pension 100 2017 index. German companies have even left them clearly behind. DAX companies recorded an increase of 63 to 68%. Global coverage levels have increased in 2017, she continues.
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