In the end, this resulted, in local currency terms, in a return of over 20 per cent for global equity markets. That said, there were significant differences across countries and industries, and the real drivers of performance last year were technology companies, especially the “glorious seven” from the United States (Apple, Alphabet, Amazon, Meta, Microsoft, NVIDIA and Tesla). The Swiss market lagged behind global trends with a yield of 6 per cent.

Bond markets also experienced a dynamic year. The more restrictive monetary policy to contain inflation led to rising interest rates – except in Switzerland, where falling interest rates on longer Swiss franc bond maturities enabled a considerable yield of 5 per cent. 

Continued demand for housing combined with a simultaneous shortage of supply had a positive impact on the Swiss real estate market. Vacant apartments are steadily decreasing in number, which has a price-supporting effect despite the increased financing costs. Added to which, the renewed rise in the reference interest rate means that many rents will go up again in April 2024. Rising rental income is likely to offset much of the higher cost base.

Development of performance

With the achieved return of 7.40 per cent, the coverage ratio rose to 113.50 per cent, compared to the previous year’s 108.83 per cent. The fluctuation reserves increased by a corresponding 49.2 million francs, in doing so strengthening Ascaro’s financial stability.

For some years now, the level of interest on savings capital has been closely linked to the technical interest rate, and pension funds in competition are subject to additional rules on when benefit improvements may be paid in accordance with Art. 46 BVV2. Until now, any interest on the retirement assets of active insured persons that is higher than the upper limit defined in the generation tables under FRP 4 was considered an improvement in benefits; from 2024, this will be based on an average value of the technical interest rate defined in the "Report on the financial situation" published annually by Switzerland’s Occupational Pension Supervisory Commission (OPSC). The new rule that restricts competition states that if at least 75 per cent of the target fluctuation reserves have not been accumulated, a maximum interest rate of 1.75 per cent may be paid for the new year.

Due to the extremely positive result, the Board of Trustees has decided to pay active insured persons additional interest of 0.75 per cent and recipients of retirement and survivors’ pensions a one-off grant of CHF 500 and CHF 300 respectively for 2023. The interest rate for the past year is therefore 2.00 per cent, which is double the OPA minimum rate set by the Federal Council for 2023. For the new year, the Board has set the interest rate on savings capital at 1.25 per cent in advance, as it did a year ago. This corresponds to the minimum interest rate set by the Federal Council for the new year under the OPA, which was also recommended by the Federal Commission on Occupational Benefit Plans. At the same time, this value corresponds to the technical interest rate applied to the valuation of pension capital. The interest is paid by Ascaro on compulsory and supplementary assets for the whole year (even in the event of departure or retirement during the year). Over the past five years, savings balances with Ascaro have yielded an average annual interest rate of 3.29 per cent, which continues to represent superb value!

Interest rate for actively insured persons

In the reporting year, Ascaro succeeded acquiring in one major business in particular following a competitive tendering process. This will find us welcoming some 300 new insured persons to Ascaro on 1 January 2024. We are gradually approaching 50:50 parity in the number of active policyholders to persons drawing a pension.

The current term of office of the 12-member Board of Trustees ends in mid-2024. While the allocation of the employer representatives is carried out by means of defined implementing provisions, the employee representatives are elected directly by the Delegates’ Meeting. In addition to the strategic management of our pension fund, the mandate also covers the treatment of regulatory and other issues in connection with the 2nd pillar. Members of the Board of Trustees contribute their know-how in various commissions and committees, thus helping to successfully steer Ascaro’s ship through the challenging OPA waters going forward. The new elections will take place on the occasion of the next Delegates’ Meeting on 30 April 2024.

In particular, the reform includes the following measures:

• A reduction of the conversion rate at the reference age from 6.8 to 6 per cent
• Strengthening of the savings process
• Compensatory measures for the transitional generation (15 age cohorts from age 50)

The majority of Ascaro’s occupational benefits are in the supplementary category, which is why the reform is likely to have less impact on Ascaro than on occupational benefits schemes that pay benefits close to the legal limit.

We are looking forward to the outcome of this groundbreaking vote!