ipeSwiss pension funds will need to pursue riskier investment strategies in a hunt for higher returns in a prolonged period of low interest rates and amid the consequences of the COVID-19 pandemic.

“Hunting for yield is costlier and harder to do for pension funds, as for other investors,” Jackie Bauer, head of retirement and public policy research at UBS, told IPE.

The occupational pension scheme Stiftung Auffangeinrichtung BVG said in a statement that negative interest rates cause long-term damage to savings – placing pension funds at a crossroads that may lead to making choices with uncertain outcomes, it said.

“A specific savings target can only be achieved by taking higher risks, otherwise the savings target must be reduced or financed through higher savings contributions,” the institution added.