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 2023, there were 10 654 (previous year: 11 049) actively insured members compared with 13 887 (previous year: 14 176) retirees, of whom 8 799 had reached retirement age, 302 were drawing a disability pension, and 4 329 were drawing a widow(er)’s pension. Orphans’ and children’s pensions accounted for a further 457 current pensions. The average current pension income amounted to CHF 40 281 (previous year: CHF 40 501).
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 114.9%. This means that the fluctuation reserves are 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
Following the successful averting of the impending banking crisis in March and in view of the growing hope of a foreseeable end to interest rate hikes by the major central banks, the stock markets performed favorably in the first quarter. In the second quarter, global equities in particular recorded significant advances. On the other hand, yields on longer-term government bonds in the industrialized countries continued to rise, adversely affecting bond performance. Market volatility remained high. After three quarters, the performance of the individual asset classes showed a mixed picture. Equities were supported by the surprisingly strong resilience of the US economy, the slow but steady decline in overall inflation and optimism about artificial intelligence. Robust economic data and rising supply put increasing upward pressure on bond yields, which also had a negative impact on equity valuations in September. Interest rate-sensitive asset classes such as bonds and property lost value as market participants increasingly assumed that interest rates would remain higher for longer. The Swiss franc appreciated against the USD and the EUR. During the fourth quarter, the markets began to expect significant interest rate cuts in 2024. Lower interest rates and robust growth data from the US helped to strengthen confidence in a soft landing for the global economy. These positive macroeconomic developments were a key driver of financial market performance, with positive returns for equities, bonds and infrastructure investments.
In this environment, equities performed best with a gain of 15.87%, followed by bonds (+3.57%), infrastructure investments (+3.06%) and cash and cash equivalents (+1.48%), while alternative investments (-1.38%), real estate (-2.67%) and foreign currencies (-6.05%) tended negatively. Overall, the performance of Pension Fund 1 amounted to 2.92%, trailing the benchmark by 40 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 61 529 36 23 or email to:
markus-pk.moser@novartis.com