Facts & Figures
Statistical Data
Let us start with some statistical data on Novartis Pension Fund 1 as reported in the actuarial statement: On 31 December 2022, there were 11 049 (previous year: 11 329) actively insured members compared with 14 176 (previous year: 14 579) retirees, of whom 9 006 had reached retirement age, 313 were drawing a disability pension, and 4 432 were drawing a widow(er)’s pension. Orphans’ and children’s pensions accounted for a further 425 current pensions. The average current pension income amounted to CHF 40 501 (previous year: CHF 40 555).
Coverage Ratio
The funding ratio is computed as the ratio of tied assets to free assets. Based on the statutory method of declaration in accordance with art. 44 para. 1 BVV 2, the funding ratio amounted to 114.6%. This means that the fluctuation reserves dropped below their target level and that the capacity of Novartis Pension Fund 1 to manage financial risk within the framework of its strategic
asset allocation is therefore restricted. At the same time, there are no further free funds available. Also reflected in the funding ratio are the substantial increases of the actuarial reserves for pensions over the past years and the provisions made for financing compensation credits in the context of the conversion rate adjustments enacted in January 2022. With all these
measures, due account was taken of the low interest rate levels that have persisted for years and the continuously rising life expectancy.
Performance
Against the backdrop of the Russian invasion of Ukraine, looming commodity supply disruptions and increasedinflation rates, financial markets were very volatile in the first two quarters of the year. Equities and fixed income securities fell in tandem, as it were, in June, ending one of the worst first half-year periods in decades. The main reason for the dampened globalsentiment was fear that persistently high inflation would lead to increasingly restrictive central bank policies and undermine consumer spending. During the third quarter, the downward trend in both equities and bonds continued after a brief recovery period, accentuated by lingering concerns that central banks would continue to raise policy rates rapidly and fading hopes of a rapid economic recovery. The rally in global equity markets that began in October faded in the final month of the year as growth prospects deteriorated again. On the bond side, investors had to accept losses in the fourth quarter as well.
In this environment, infrastructure investments with a plus of 11.73% and alternative investments (hedge funds, +7.27%) performed best, whereas all other asset classes, namely equities (–17.71%), bonds (–13.59%) and real estate (–0.81%), trended negatively. Overall, the YTD result for PF1 was –7.63%, outperforming the benchmark (of –10.23%) by 260 basis points.
Are you interested in further information?
As a member of the Novartis Pension Funds, you may obtain the detailed Annual Report for 2021 from the Pension Fund Team: Please feel free to call
+41 61 324 24 20 or email to:
markus-pk.moser@novartis.com