Key Figures
Statistical Data
Let us start with some statistical data on Novartis Pen-sion Fund 1 as reported in the actuarial statement: On 31 December 2020, there were 12118 (previous year: 12319) actively insured members compared with 14 896 (previous year: 15091) retirees, of whom 9482 had reached retirement age, 354 were drawing a disabilitypension, and 4 630 were drawing a widow(er)’s pension. Orphans’ and children’s pensions accounted for a further 430 current pensions. The average current pension income amounted to CHF 40 638 (previous year: CHF 40 617).
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 117.4 percent. This means that the financial situation has been significantly strengthened compared to the previous year and that the fluctuation reserves are at their target level. Hence, the capacity of Novartis Pension Fund 1 to manage financial risk is deemed unrestricted within the framework of its strategic asset allocation. At the same time, provisions of CHF 369 million, set aside in the previous year, were used to further strengthen the underlying capital base of the pension obligations (in the context of a further adjustment of the actuarial discount rate). 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 2016. With all these measures, due account was taken of the persistent low interest rate levels and the continuously rising life expectancy.
Performance
Following the disruptions caused by the COVID19 pandemic at the end of the 1st quarter, the extensive monetary and fiscal policy measures taken by numerous governments and central banks began to have a stabilizing effect in the 2nd quarter. Positive results from vaccine trials and improvements in economic data helped stock markets in the major industrialized countries and China to rally, which lasted well into the 3rd quarter and partially offset losses. After a cautious start into Q4, the stock markets set off on a renewed bull market in early November and ended 2020 on a pleasing note, fueled by the start of the COVID vaccination programs in the USA and the UK, the adoption of a new stimulus package in the USA and a further expansion of monetary policy support by the ECB. The successful conclusion of trade talks between the EU and the UK also had a stimulating effect at the end of the year. In terms of bonds, global corporate bonds delivered the highest returns.
Overall, with positive contributions from all asset classes, except cash and foreign currencies, the YTD performance for Pension Fund 1 was up by 6.53%, exceeding the benchmark (6.14%) by 39 base points.
Are you interested in further information?
As a member of the Novartis Pension Funds, you may obtain the detailed Annual Report for 2020 from the Pension Fund Team: Please feel free to call
+41 61 324 24 20 or email to:
markus-pk.moser@novartis.com