Home > News > Pensions > Swiss Pension Fund Publica Lost 9.6% in 2022
Pensions

Swiss Pension Fund Publica Lost 9.6% in 2022

The $47.8 billion fund, which still outperformed its benchmark, blamed the decline on ‘massive upheaval’ of global financial markets.
By Michael Katz


Swiss pension fund Publica reported a 9.6% loss in 2022, which the pension fund attributed mainly to a weak performance by its equity and bond asset classes. Last year, the pension fund reported an investment return of 4.43%. It ended 2022 with total assets of approximately 44 billion Swiss francs ($47.8 billion).

“Massive upheaval on the global financial markets depressed returns on Publica’s investments,” the pension fund’s release stated.

Despite the loss, the performance exceeded its benchmark, which posted a loss of 10.09%. The pension fund’s release also stated that, due to rising interest rates, “a return to much higher performance can be expected over the long term.” Publica also revealed that it is now beginning to implement, on a staggered basis, changes to its strategic asset allocation that it made in June 2022.

For more stories like this, sign up for the CIO Alert newsletter.

Publica, which is comprised of 18 pension plans, has closed plans whose participants are entirely made up of retired pension recipients, while the open plans contain both pension recipients and active members who are still working. The closed pension plans, which have a 10% allocation to equities, reported an 8.0% loss for the year, while the open pension plans, which have an approximately 25% allocation to equities, recorded a 9.7% loss. The consolidated funded ratio across all pension plans is estimated at 96.7%.

Bonds were the biggest burden on the portfolio, losing approximately 12% overall and making a negative contribution of 6.3 percentage points to the performance, while equities contributed a loss of 4.1 percentage points. The six main geographical regions all produced losses in 2022, led by Europe ex-Switzerland), which lost 11% for the year, followed by an 8% loss from investments in Japan and a 6% loss from Pacific (excluding Japan) investments. Realized equity returns ranged between losses of 16% and 17%.

The pension fund’s real estate investments provided one of the few bright spots for the portfolio, with foreign real estate funds returning 14% on a currency-hedged basis, while directly held Swiss real estate returned 3.9% for the year.

Publica said that an analysis it conducted in 2021 indicated that inflation would very likely be higher over the next decade than the preceding one. As a result, the fund’s board decided to reduce its weighting of bonds in favor of higher weightings for real assets and listed equities due to real assets’ tendency to outperform nominal assets during periods of higher inflation.

“The expected return over the medium to long term is thus higher than with the former strategic asset allocation,” the pension fund said.

Related Stories:

Swiss State Pension Publica Divests from Weapon Firms

With a Recession Enroute, Should Pension Funds Be Worried?

Swiss Regulator Facing Criticism over Public Employee Pension Revamp

Tags: , , , , , ,

Home > News > Newsmakers > 25 States and 3 Fossil Fuel Industry Actors Sue to Block DOL Rule Permitting ESG Investing
Newsmakers

25 States and 3 Fossil Fuel Industry Actors Sue to Block DOL Rule Permitting ESG Investing

The lawsuit seeks an injunction against the rule, set to take effect Monday, which would allow ESG considerations in retirement plan investment decisions.
By Paul Mulholland



Twenty-five states with Republican attorneys general, two oil-services companies and an oil and natural gas advocacy group filed a lawsuit in U.S. District Court on Thursday against the Department of Labor seeking to prevent and overturn its rule permitting environmental, social and governance considerations in retirement investing.

The lawsuit, filed in the U.S. District Court for the Northern District of Texas, also was brought by oil-service companies Liberty Energy and Liberty Oilfield Services, advocacy group Western Energy Alliance and retirement plan participant James R. Copeland. It seeks to prevent the implementation of the DOL’s final rule regarding the use of ESG strategy in retirement investing, set to take effect on Monday, January 30.

The lawsuit claims the rule oversteps the Department of Labor’s statutory authority under the Employment Retirement Income Security Act of 1974 and seeks a preliminary injunction against it. The plaintiffs are also asking the court to grant “permanent relief in the form of a declaration that the ESG Rule violates the [federal Administrative Procedures Act] and ERISA and is arbitrary and capricious.”

The rule clarifies that fiduciaries may consider ESG factors in investing without violating their fiduciary duties, but does not require it.  The rule as adopted clarifies how the fiduciary duties of prudence and loyalty under ERISA apply to selecting investments and investment courses of action, including selecting qualified default investment alternatives; exercising shareholder rights such as proxy voting; and the use of written proxy voting policies and guidelines.

The rule reverses amendments to the department’s investment duties regulation adopted in 2020, during the administration of President Donald Trump.

Never miss a story — sign up for CIO newsletters to stay up-to-date on the latest institutional investment industry news.

The lawsuit claims that the rule “undermines key protections for retirement savings of 152 million workers—approximately two-thirds of the U.S. adult population and totaling $12 trillion in assets.”

The state attorneys general bringing the suit represent Alabama, Alaska, Arkansas, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, New Hampshire, Ohio, South Carolina, North Dakota, Tennessee, Texas, Utah, Virginia, West Virginia and Wyoming.

Tags: , , ,

«