Swiss Federal Social Security Funds return 5.22% in 2020

Compenswiss, responsible for the investments of the Swiss Federal Social Security Funds – the Federal Old Age and Survivors' Insurance (AHV), the Federal Disability Insurance (IV) and the Income Compensation Scheme (EO) – made a return of 5.22 per cent in 2020, compared to 10.22 per cent in 2019.

At the end of 2020, its assets stood at CHF 38,543m compared to CHF 36,440m at the end of 2019. Assets under management consist of investment assets of CHF 35,060m (CHF 34,764m at the end of 2019) and liquid assets (cash) amounting to CHF 3,483m (CHF 1,676m at the end of 2019).

The net return on the assets of the AVS Compensation Fund amounted to 4.05 per cent (9.62 per cent 2019), the AI returned 4.29 per cent (9.81 per cent 2019), and the APGs returned 4.34 per cent (9.81 per cent 2019).

The significant difference between the performance of the market portfolio (5.22 per cent) and that of the three funds is due to the strong fluctuations in liquidity during the year; fluctuations due to the turbulent year, which weighed on the profitability of the funds.

Commenting, Compenswiss board of directors chairman, Manuel Leuthold, said: “At the end of March, at the lowest point, the performance of the entire Compenswiss portfolio was -10 per cent. A bull market and well-timed decisions turned the tide and ended 2020 in the black."

Compenswiss said it increased the level of its liquidity, in order to respond to the uncertainty of cash inflows. As a result, it has been able to pay annuities throughout the year.

Compenswiss director, Eric Breval, said: “To be prudent, the level of liquidity was increased in spring 2020. The outflows, i.e. the amount of pensions payable, have remained virtually unchanged. The Covid-19 pandemic, on the other hand, has led to a reduction in cash flow. The increased liquidity allowed Compenswiss to meet payment obligations at all times."

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