I was often told that pillar 2 in Switzerland is mostly considered as bond. Low return.
My company has actually a quite decent equity allocation. I was curious to hear from others about what % your pension funds invest in equities?
Thanks!
They might invest in equities, but they certainly don’t pass that performance unfiltered to their customers/you (keeping the good year’s reserves for the bad ones).
Since there is a “guaranteed” low return, I don’t see a fault in continuing to consider it as a bond.
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This. Pension funds are usually invested up to 45% in equities. You get 1-3%/year in return, so one should look at it as a bond.
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That said for people using 1e plans, there might be a question how to account for it (those are often unfiltered and equity heavy).
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Thank you! This is very helpful to know.
In general, how the additional profits are filtered down if any? I heard sometime pension funds lower the employee’s contribution (e.g from 60% to 40%) following good years when the funds accumulated surpluses.
Is that common? Keen to hear your experiences
I have never heard of a company lowering an employee’s contribution after a good year of returns. Also, it’s not legal to ask for more than 50%, so your example from 60% to 40% is not possible.
In most cases, pension funds will accumulate the extra returns into reserves for market fluctuations. All pension funds have a target for that reserve, and when they hit it, the extra money goes into “disposable funds”, which can be distributed to the employees (but there is no obligation). Usually, the higher the percentage of equity in the fund, the higher this target reserve is set. You have to look at your fund’s documents to find out, or ask your personnel representative.
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