Pension funds – reacting with moderation and flexibility Ladies and gentlemen, the pension funds have not been idle in the last few years with regard to the challenges mentioned. As pension fund managers, you have shown moderation and great flexibility in initiating various measures to bring your pension funds’ income and expenditure into equilibrium over the long term as well. On the investment side, the exposure to fixed-income instruments has been reduced – given the persistently low interest rates – in favour of equities and real estate (cf. chart 4). Furthermore, the pension funds have again become more active abroad, and are keeping their liquid assets to a minimum. Indeed, liquidity as a share of total investment assets is currently at a historic low (cf. chart 5). You have also had to take action on the benefits side in order to balance income and expenditure over the longer term. These cuts are painful and have been directly reflected in people’s insurance certificates. One example is the sharp reduction in the conversion rate for non-mandatory cover. 8 Moreover, the technical interest rate 9 has been lowered by 40% in the last ten years. This took account of the probability that income from the ‘third contributor’ would also be greatly limited in future.
Page 8/8  Challenges confronting the pension system – options and limitations of monetary policy Thomas J. Jordan Chairman of the Governing Board Swiss National Bank PK-Netz conference, Berne, 31 October 2019  Chart 1  31.10.2019  Challenges confronting the pension system – options and limitations of monetary policy | Thomas J. Jordan | © Swiss National Bank  Chart 2  31.10.2019  Challenges confronting the pension system – options and limitations of monetary policy | Thomas J. Jordan | © Swiss National Bank  Chart 3  31.10.2019  Challenges confronting the pension system – options and limitations of monetary policy | Thomas J. Jordan | © Swiss National Bank  Chart 4 and 5  31.10.2019  Challenges confronting the pension system – options and limitations of monetary policy | Thomas J. Jordan | © Swiss National Bank  Chart 6  31.10.2019  Challenges confronting the pension system – options and limitations of monetary policy | Thomas J. Jordan | © Swiss National Bank