The study differentiates between public pension funds with funding ratios under 100%, and private funds with funding levels of around 107.5%.“The coronavirus crisis leads to uncertainty, to problems for the financial market and to negative returns,” said Jürgen Rothmund, investment analyst and author of the report.This year Complementa expects different performance levels from pension funds, which will depend on their reaction to the crisis. “There will be funds with less strong negative returns and funds with very strong negative returns,” he added.Returns reached -3.9% at the end of April compared to 10.6% in 2019. Higher returns were only recorded in 2005 with 11%.“The coronavirus crisis leads to uncertainty, to problems for the financial market and to negative returns”Jürgen Rothmund, investment analyst at ComplementaIn the last decade, between 2011 and 2020, funds achieved average returns of 3.6%, according to the analysis. “This is a high figure if you think how low the interest rate is,” Rothmund said.Swiss pension funds have invested the returns of 2019 to build up their funding ratio (49%), while 19% was spent on interest payments, 1% on administration, 6% on administration of losses, and 25% on adjustment of technical parameters, including technical interest rate, the report disclosed.The study compared the impact on investments caused by the COVID-19 crisis to other crises in the past, including the financial downturn of 2008, and found similarities with the consequences brought by the collapse of the Long-Term Capital Management (LTCM) hedge fund in the 1990s.“Pension funds will have to continue to fight against low interest rates” when the coronavirus crisis will eventually ease, Rothmund added.The interest rate on employees’ savings was 2.2% in 2019, relatively high in relation to a minimum interest rate for occupational pensions of 1%, and for the fist time since 2002 over the technical interest rate, the analysis showed.“It is certain that the technical interest rate will continue to drop, we estimate from 1.9% in 2019 to 1.8% this year,” Rothmund said.The Umwandlungssatz (UWS), the conversion rate used to calculate pension payouts from accrued assets upon retirement, will decrease in 2020 to 5.53%, and in the next five years even further, to 5.26%.“It is very far away from the established 6.8% and from the correct actuarial conversion rate of 4.48% we calculated, but the difference will decrease in the next five years,” Rothmund said.In the study, Complementa asked pension funds whether the Swiss second pillar pension system was fit for the future – 80% of respondents found it reasonable to increase the retirement age to make it sustainable, but only 25% believe the measure will be executed.Complementa said pension funds must generate a return of at least 2.2% in order to maintain a stable funding ratio.To read the digital edition of IPE’s latest magazine click here. The funding ratio of Swiss Pensionskassen bounced back to 103% in April after declining to 99.8% for a short time at the end of March, according to Complementa’s latest “risk check-up” analysis report.Central banks have sent a clear message through a series of interventions to say they “stand by” the equity market “whatever it costs”, Thomas Breitenmoser, head of investment consulting at Complementa, told IPE during a conference call.The funding ratio of Swiss pension schemes will depend on the future of equity markets, he said, adding that it should not drop further as long as national banks keep their current policies in place.The analysis focuses on 158 Pensionskassen with total assets of CHF396bn (€371), and it is based on previous year’s data of 437 pension funds with assets worth CHF650bn, which represents 70% of the Swiss occupational pension system.
U.S. Navy and Marine Corps divers began searching for 10 sailors from USS John S. McCain (DDG 56), missing since the guided-missile destroyer and merchant vessel Alnic MC collided early on August 21, 2017.Equipped with surface supplied air rigs, divers will access sealed compartments located in damaged parts of the ship. Additionally, they will conduct damage assessments of the hull and flooded areas, the Navy explained.While diving proceeds, ships and aircraft from the Royal Malaysian Navy and Republic of Singapore Navy continue to provide search and rescue assistance along with two U.S. Navy MH-60 Seahawk helicopters from amphibious assault ship USS America (LHA 6). Those search efforts are focused on an area east of the Strait of Malacca and Singapore where the collision occurred as McCain was transiting to Singapore for a routine port visit.John S. McCain and America arrived at Changi Naval Base on Monday after shipboard damage control efforts by the crew had halted further McCain flooding. While both ships are in Singapore, America is providing meals, berthing and other support to McCain crew members and supporting damage control efforts on board which are focused on dewatering the ship and restoring auxiliary systems.Royal Malaysian Navy ship KD Handalan and two coastal patrol craft Petir (12) and Pang Alang (39) as well as two Malaysian Maritime Enforcement Agency vessels are assisting in the search, as are Republic of Singapore Navy Fearless-class patrol ships Noble Pearl (PCG 54) and Noble Knight (PCG 56).Several diving units are supporting search efforts, including Navy divers from Ship Repair Facility Yokosuka and Commander Logistics Group Western Pacific as well as Marine divers from 15th Marine Expeditionary Unit embarked on America.Alnic MC is a Liberian-flagged 600-foot oil and chemical tanker with a gross tonnage of 30,000.The incident will be investigated to determine the facts and circumstances of the collision.