Switzerland’s SBB Pension Fund has reported a 4.8 per cent return for 2025, outperforming its benchmark by 0.2 per cent, while increasing its funding ratio to 111.6 per cent.

Its full-year results revealed that despite volatile financial markets during 2025, the scheme maintained stability and strengthened its financial position.

An equity allocation of 30 per cent contributed to performance, with equities delivering 7.6 per cent and emerging as the strongest asset class. Swiss and non-US equities outperformed US equities.

Real estate generated a return of 5.8 per cent, supported by increased demand in Switzerland following interest rate cuts by the Swiss National Bank. In contrast, fixed-income and credit investments posted negative returns of -0.7 per cent and -2.2 per cent, respectively.

Currency hedging provided a 2.2 per cent gain against the Swiss franc due to the depreciation of the US dollar, improving overall returns.

During the year, the fund increased its equity allocation by 3 per cent, while reducing fixed-income holdings by 2.5 per cent and real estate and infrastructure allocations by 0.5 per cent.

Within property, domestic Swiss real estate exposure was increased, while foreign holdings were reduced.

The pension fund also lowered its technical interest rate (used to value pensioners’ assets) from 1.75 per cent to 1.25 per cent, reflecting the low-interest rate environment.

Without this adjustment, the funding ratio would have reached 114.2 per cent.

Retirement savings were credited at 2.5 per cent, and administrative costs remained at CHF 98 per member, below the Swiss average of CHF 330. However, no additional payments were made to pensioners due to stagnant inflation.

Around two-thirds of new retirees opted for full or partial lump-sum withdrawals, receiving on average 47 per cent of their retirement capital as a lump sum.

To help members make informed choices between annuities and lump-sum payments, the pension fund provides targeted information, including courses, guides, and digital tools.

Looking ahead, SBB is targeting a long-term annual return of 2.5 per cent, with diversification remaining a key focus amid ongoing geopolitical and economic uncertainty.

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