Global Pension Finance Watch, published quarterly by Towers Watson, shows that over the second quarter of 2011 the funding level of a typical Swiss pension plan, under international accounting principles, has declined by around 4 per cent. “This reduction reflects the fact that asset returns were slightly negative overall in the second quarter” explained John Carter, Senior Consultant at Towers Watson Zurich. There was also a decrease in the benchmark discount rate by around 0.2 per cent leading to higher liabilities. The combination of lower assets and higher liabilities resulted in a decrease to the benchmark Pension Index for the quarter, from 100.0 at 31 March 2011 to 96.0 at 30 June 2011.
Since the start of 2011, the Pension Index has fallen from 98.4 to 96.0 which also reflects a combination of lower asset return and lower discount rates over that period. However, the results also showed that the Pension Index at the end of March 2011 was the highest that it has been since March 2008 “This reflects a combination of relatively good investment returns in the prior quarters along with a relatively high discount rate”, according to Carter.
