deckungsgrad was >130% a year or two back, they have built so much reserves that they distribute a lot even in bad years
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Thanks for sharing.
UBS pension fund is really a great advantage to their employees and often never mentioned in public forums.
All I hear is that employees are forced to use discounted UBS custody accounts but never that they also have high performing pension funds while some other employers are happy to offer only 1% interest
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true, people love to complain around that, myself included, and people miss the big picture.
Broker restrictions can be circumvented by having the account in your partnerâs name (obviously you are then not allowed to making any investment decissions).
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Yes, at first, I thought this should anyway even out as everybody eventually retires so you have to accrue for eventual retirees. But maybe the industry is such that the PF members tend to leave the PF early and so withdraw a lump sum instead of annuity?
Agree
Do you know if UBS pension fund asset allocation is public? I am curious what is the distribution of assets in terms of equities , fixed income and RE
Indeed, if I worked for UBS, Iâd basically pump everything into pension overpayments until it was full.
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I wonder why UBS model cannot be deployed to other funds. In the end they all have to follow same rules.
To me it seems we always hear about cross subsidies (contributing vs retirees) as major issue but I think it might be more about asset allocation as well. Very conservative portfolios lead to low returns and force cross subsidies even more.
Total return for an employee = function(contributions, asset allocation, cross subsidies, conversion rate for BVG)
All of these variables impact each other but when it comes to vote/reforms only conversion rate is discussed and nothing else.
Well some are so deep in the shit hole (high number of retirees with high conversion rate and low working/paying folks) that they simply cannot take the risk with a higher equity allocation as that will blow them out during very bad years. But oh well, you can also blame the SNB with the negative interest rate over your bad management 
SNB-Negativzinsen: Pensionskassenchef warnt vor den Folgen | cash
Right.
For those funds maybe consolidation with other funds could be a route to get out of this situation.
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Iâm not aware.
That is true, but if a PF can explain why it wants to deviate from these limits, it can. So 100% equity is possible, can confirm this for a pension fund that I know of.
Allerdings: Der regulatorische Rahmen wĂŒrde den Pensionskassen einen grossen Spielraum gewĂ€hren. FĂŒr Aktien gelten 50 Prozent des Gesamtvermögens als Obergrenze, fĂŒr Immobilien 30 Prozent (davon höchstens ein Drittel im Ausland) und fĂŒr alternative Anlagen 15 Prozent (z. B. Rohstoffe, Private Equity oder Hedge Funds).
Mehr noch: Diese Kategorienbegrenzungen sind nicht bindend. âDank des Ausnahmeartikels (Art. 50 Abs. 4 BVV2) können die Limiten grundsĂ€tzlich mit einer fachmĂ€nnischen BegrĂŒndung ĂŒberschritten werdenâ, schreibt der Schweizerische Pensionskassenverband ASIP auf Anfrage.
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In 2019 UBS reduced the conversion rate (Umwandlungssatz) from 5.42% to 4.42%. Source
This changed everything and allows them to pay higher interest to active employees.
In my current company with Axa pension fund and a higher (but still lower than the BVG one) conversion rate, we were told that the redistribution is actually not that high (like 0.X% per year on average, and in the reverse in recent years, since on good years the retirees donât benefit from stock market gains, they often donât even get inflation adjustments).
IMO asset allocation has an even bigger impact (tho I think it makes sense to ensure that the redistributions are null over the long term).
Btw iirc UBS also caps the max annuity, that also massively reduces the pension funding risks (like those people with massive pots canât create large liabilities for the fund).
As mentioned by others Conversion rate for 2025 and 2026 | Profond has 5.6% conversion rates, and 3.6% average interest rate over 10y (Key Figures | Profond), which also would point to asset allocations having the biggest impact.
edit: I think what might help UBS in the end, might be that the employees on the pension committee (and the employee in general) could be more financially savy, and so are willing to have a more risky allocation profile (I donât know how that could be proven, but Iâve seen at least one example of a company with highly paid employee â e.g. most people above 160k â who decided to not go for a 1e because they deemed it as too risky so were not willing to increase return through higher volatility + losing potential annuities)
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This could be a very important reason.
The more people understand the effects of their decisions in terms of risks, the better decision they can take.
I think for lot of employees, itâs good enough to have tax savings for 2nd pillar contributions and they are happy that capital is âprotectedâ. But if this is right decision in long term, they might never think about it
Correct, the annuity cap is at around 130k a year, from what Iâve read. Which at 4.42% still requires almost 3M in your 2nd pillar, to reach that. But it sure has an effect.
Probably UBS also wants to manage the money taken out by their ex-employees. 
IMO the main question is how opposed an employer is to restructuring measures (Sanierungsmassnahmen) in case the coverage ratio goes way under 100%, because the company would also have to pay for it in this case.
For example the government wants to avoid those measures by any means necessary. Thatâs why they donât take as much risk with their asset allocation and why they pay rather low interest in comparison to other pension funds.
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In the 90s there was a gas station in Altstetten at the UBS area where you could fill your tank for free as a director. Number plates from all over Switzerland could be seen thereâŠ
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I left UBS (worked in ZĂŒrich) last year. For me the best perk was the Pillar II.
But I donât understand how good can be that, i think i would get more investment return by having the net amount, invest it on the S&P and have the money always available instead of locked in the 2nd pillar with similar returns?
There are two aspects
Mandatory contributions
Letâs say you work in company A where 2nd pillar interest is 1.25% and company B where itâs 6.5%
In both companies your (employee & employer) mandatory contributions would be similar. You donât have much choice. So itâs always better to have a high performing 2nd pillar because your contributions are compounding at very high rate
Voluntary contributions
Now letâs talk about Voluntary contributions.Think about following
- capital in 2nd pillar is locked after it gets interest paid, it cannot go down. In S&P 500 ETF, your capital can go from 100 to 80 in a matter of weeks if you enter a bear market
- When you invest in SP500, you donât get income tax relief at time of investment. For 2nd pillar, you are looking at 20-40% depending on you marginal tax rate
- Returns in 2nd pillar are also tax free, while S&P 500 ETF dividends will be taxed for income and wealth tax
- Withdrawals from 2nd pillar attract lumpsum tax, this is disadvantage
2nd pillar with performance like UBS is unparalleled in Switzerland, but sure people can invest in S&P 500 too if thatâs what is more desirable, comfortable & certain source of returns.
For reference MSCI USA index when measured in CHF provided 5.26% annum returns before taxes since Dec 2001. So accounting for taxes, the number will be below 5%.
Related point to P2 capital being locked after interest paid, I just learned that thereâs no capital guarantee on P2 (at least for mine). Does anyone know what is the implication actually? Is it like when thereâs bad management, my balance potentially could be reduced??