Executive Summary
Swiss pension funds invest with an average of only 30 percent equity allocation, an extremely conservative approach that misses substantial return potential. While bonds have lost money in real terms since 2014, higher equity ratios could increase pensions by up to 50 percent. Board trustees avoid risks due to liability concerns, even though scientifically-founded solutions for risk hedging exist. The system favors short-term security at the expense of long-term retirement wealth.
People
- Thorsten Hens – Finance Professor, University of Zurich
- Daniel Gloor – former Chief Investment Officer BVK
- Lukas Riesen – Partner PPCmetrics
- Stephan Skaanes – CEO PPCmetrics
- Andreas Zimmermann – Economics Professor
- Francesca Pitsch – Head of Pension Fund Study ZKB
Topics
- Retirement provision and return potential
- Strategic asset allocation
- Risk hedging in pension funds
- International comparisons (Scandinavia, Denmark)
- Demographic change and life expectancy
- Liability law and governance
Detailed Summary
The Problem: Too Many Bonds, Too Few Stocks
Swiss pension funds hold on average only 30 percent equities and 33–40 percent bonds. This investment policy leads to dramatic return losses. While Swiss equities have generated average returns of 7.6 percent annually (inflation-adjusted) since 1985, bonds have delivered only 2.2 percent – and even negative returns since 2014.
The differences between pension funds are enormous. In 2024, annual returns ranged between 0.2 and just under 14 percent. Over an entire working life, such differences accumulate into substantial wealth gaps. Thorsten Hens would have received a 44 percent higher pension upon switching to Profond – a vivid illustration of the costs of this strategy.
The Wealth Secret: The "Third Contributor"
Since 2004, 40 percent of wealth growth has come from market returns (versus 35 percent employer contributions, 25 percent employee contributions). This compound interest effect is gaining importance as life expectancy increases: pension funds today pay out pensions for an average of 21 years, compared to only 15 years in 1985.
However, only 38 percent of insured persons are aware that pension funds invest their money. This lack of awareness contributes to acceptance of low returns.
Why Board Trustees Avoid Risks
The caution of pension funds follows rational incentives:
- Personal Liability: Board trustees are liable for negligently caused damages
- Funding Shortfall Risk: Underfunding (when assets fall below promised benefits) leads to contribution increases
- Asymmetric Scandal Coverage: Every book loss is publicly criticized, foregone gains remain invisible
- Demographic Burden: Funds with many retirees (e.g., BVK, Publica) must legally guarantee pensions and can bear less risk
Solutions Exist – But Are Not Used
Hens and other experts demonstrate that solutions are feasible:
Hedging Strategies: Insurance against dropping below 90 percent funding ratio costs approximately 1 percent return per year – but would pay for itself several times over through higher equity returns
Age-Appropriate Portfolios: Instead of blanket caution, young workers should carry higher equity ratios (60%+), with older workers gradually shifting allocations
Pension Factory Model: Specialized funds (e.g., for retirees) align strategy with remaining life expectancy – 70-year-olds can still tolerate 15 years of fluctuations
The Nordic Comparison: +50% Pension Possible
Denmark shows the potential: With only ~30 pension funds (versus 1285 in Switzerland), PensionDanmark benefits from economies of scale and acts as a pure asset manager:
- Young Danes: 60%+ equities
- 60-year-olds: 37% equities (higher than Swiss average)
- Real returns 2015–2024: over 4% p.a. (Switzerland: under 2%)
- Result: A Danish pension would be CHF 51,000 versus CHF 33,000 (Switzerland) – +53%
Danish insured persons tolerate fluctuations (in 2022 there were negative paper gains), but gain massively in the long term.
Key Findings
Equity ratios of 30% are too low: Norwegian and Scandinavian funds hold 50–70%, with significantly better long-term results
Bonds are losing purchasing power in real terms: Negative returns since 2014; starting capital doubles with equities in <10 years, but with bonds only in >30 years
Liability and funding shortfall risk are not unsolvable problems: Hedging strategies and age-appropriate portfolios offer scientifically-founded solutions
The return potential is enormous: One additional percentage point of equity allocation over 10 years = CHF 8.4 billion more wealth (equivalent to a 14th AHV pension)
Increasing to 50% equities could annually finance a century-long infrastructure project (NEAT): The unutilized return potential is structural, not cyclical
Swiss insured persons pay dearly for the full-insurance mentality: Up to 50% lower pensions than in the Danish model for identical contributions
Demographic change aggravates the problem: With 21 years of average pension receipt, the compound interest effect is decisive – low returns take a brutal toll
Stakeholders & Affected Parties
| Who is affected? | Who benefits? | Who loses? |
|---|---|---|
| Insured persons (active & retirees) | Asset managers (status quo), employers (lower contribution rates in short term) | Insured with 15+ year investment horizons, young employees (compound interest loss) |
| Board trustees | Fund administrators & advisors (safety preference), politicians (no reform pressure) | Employee representatives (information disadvantage), retirees in restructuring |
| Employers | — | Medium to long term: higher contribution rates with declining pension assets |
Opportunities & Risks
| Opportunities | Risks |
|---|---|
| +50% higher pensions possible (Danish model) | Stock market crashes (2008, 2020, 2022) directly affect insured |
| Hedging strategies cost only 1% return but save >5% | Liability risk for board trustees remains real |
| Age-appropriate portfolios maximize individual risk capacity | Political reform difficult (retirees want protection) |
| Economies of scale through merger (30 funds instead of 1285) | Transition phase: volatility in existing portfolios becomes visible |
| Better demographic resilience with higher returns | Interest rate assumption reduction might be necessary |
Action Relevance
For Insured Persons:
- Check pension fund and its equity ratio (information on pension statement)
- Evaluate switching if fund holds <25% equities
- Young employees should support higher risk exposure
For Board Trustees & Fund Management:
- Analyze hedging strategies (1% cost versus 3–5% return potential)
- Introduce age-appropriate portfolios (feasible even with heterogeneous funds)
- Increase transparency on return opportunity costs
For Politicians & Regulators:
- BVG Reform: Clarify rules for restructuring contributions by retirees (increase risk capacity)
- Create merger incentives (reduce scale disadvantages)
- Establish benchmark versus Denmark/Scandinavia
For Media & Public:
- Address "foregone returns" as damage (not just book losses)
- Communicate long-term perspective versus short-term volatility
Quality Assurance & Fact-Checking
- [x] Central figures verified (equity ratios, returns 1985–2024, Danish comparison values)
- [x] Quotes and statements from mentioned experts validated (Hens, Skaanes, Zimmermann)
- [x] Structural arguments (liability, funding shortfall risk, funding ratio) factually correct
- [x] International comparisons (Norway, Denmark) researched and confirmed
- [x] Scenario calculation (CHF 8.4 billion at +1% equity ratio) plausible
- ⚠️ Unconfirmed claim: "Pension factory founded 2019 for Jelmoli retirees" – source documentation needed
- ⚠️ Bias Notice: Article argues strongly pro-equity; counterarguments (aging debt burden, intergenerational redistribution) not addressed
Additional Research
Federal Department of the Interior (EDI) – Pension Fund Statistics 2024
Official data on asset structure, funding ratios, returnsPictet Longterm Study – Asset Class Performance since 1985
Basis for bond versus equity return comparisonPPCmetrics Pension Fund Benchmark 2024
Empirical return comparisons and allocation differencesPensionDanmark & Danish Pension Industry Association – Comparative Report
Danish model, returns, governance differencesBVK Zurich & Publica Annual Reports
Case studies for conservative old-fund demographicsCounterpoint: Swiss Pension Fund Association – Position Paper on Investment Policy
Counterarguments to risk aversion (if available)
Reference List
Primary Source:
«Pension funds invest conservatively – "One is expropriated in one's sleep"» – Tages-Anzeiger, Author: Armin Müller, 10.01.2026
Supplementary Sources:
- Zurich Cantonal Bank – Swiss Pension Fund Study (Francesca Pitsch)
- Pictet – Longterm Study on Asset Class Performance (1985–2024)
- Swisscanto – Asset Manager Data on Return Composition (40/35/25 rule)
- PensionDanmark – Return Reports 2015–2024
- Radio SRF "Echo der Zeit" – Interview Stephan Skaanes (PPCmetrics)
- UBS Worry Index – Swiss Population Retirement Provision Concerns
Verification Status: ✓ Facts and figures verified on 15.01.2026
Footer (Transparency Notice)
This text was created with support from Claude (Anthropic).
Editorial Responsibility: clarus.news | Fact-Checking: 15.01.2026 | Original Author: Armin Müller (Tages-Anzeiger)