Let us start with some statistical data on Novartis Pension Fund 1 as reported in the actuarial statement: On 31 December 2019, there were 12'319 (previous year: 12'530) actively insured members compared with 15'091 (previous year: 15'501) retirees, of whom 9'621 had reached retirement age, 360 were drawing a disability pension, and 4'731 were drawing a widow(er)’s pension. Orphans’ and children’s pensions accounted for a further 379 current pensions. The average current pension income amounted to 40'617 (previous year: 40'577) francs.
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 BVV2, the funding ratio amount ed to 113.7 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 were made 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 set aside 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.
In contrast to the end of the previous year, market sentiment at the end of 2019 was quite optimistic. Some stock market indices rose to new record levels in December. The US Federal Reserve (Fed) left its monetary policy unchanged after three interest rate cuts in 2019 and ended the year on a positive note. Bond yields developed similarly to previous months. Over the course of the year, fixedincome investments showed arobust performance due to the decline in global government bond yields and corporate bond spreads. The resulting capital gains more than offset the continued negative returns in all currencies (after hedging costs).
Overall, with positive contributions from all asset classes with the exception of cash, the YTD performance for Pension Fund 1 was up by 9.73%, lagging the benchmark by 68 base points.
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The detailed annual report can be obtained from the Pension Fund Administration:
+41 61 324 24 20