As a whole, Swiss pension funds take fewer investment risks than they could based on their risk capacity. At the panel, Laurent Schlaefli, CEO of Profond, Thomas Breitenmoser, Head of Investment Consulting/Controlling, Member of the Board of Management, Complementa AG, Henrique Schneider, Deputy Director of the Swiss Trade Association sgv, Jorge Serra, Chief Financial Officer at VPOD, Member of the Foundation Board, discussed the reasons for this behaviour by many pension funds.

In principle, the participants were able to state that the industry, with its fiduciary responsibilities and the range of participants, including the audit and monitoring function, tends to promote caution excessively. ALM studies, investment controllers and investment managers also always point in the direction of security. This has a negative impact on the focus on results and the risk tolerance.

Many people involved, such as members of the highest bodies, assume, at least subliminally, that a potential mistake is more painful and could have more personal consequences than missed opportunities for returns.

Fortunately, however, there are differences within the pension fund landscape and some pension funds do use their risk capacity to generate more return for their insured persons.

“At Profond, we pursue a real value-oriented investment strategy that generates above-average returns over the long term. For 20 years, we have invested at least 40% of our assets in equities – and with success,” Schlaefli explained.

“Since our foundation in 1991 we have achieved an average annual return of 5.4% and an average interest rate of 4% per year for our insured persons.” According to Schlaefli, Profond invests in this way firstly because it can do so thanks to its risk capacity – which is reviewed regularly – and, secondly, because the legal limits within the framework of the Ordinance on Occupational Old-Age, Survivors’ and Disability Benefits (BVV2) allow it.

“As a result, our insured persons profit from sustainably high benefits. That is why we will continue to adhere to this strategy in the future,” confirms Laurent Schlaefli.

You can find out more about Profond’s investment strategy here.

You can find further information on the Pension Symposium here.