Annual report 2024

4.00 %

Interest on savings capital

+5.31 %

Return

113.53 %

Coverage

Political and economic environment

2024 was a remarkable year for the financial markets. Despite weak economic development, stubborn inflation and initially restrictive monetary policy, the markets continued to grow. Even geopolitical tensions and acts of war were unable to curb the upward trend.

The global equity markets posted strong gains, particularly in the USA. Driven by the ongoing AI trend, the S&P 500 reached a new record high. In contrast, the performance of the Swiss equity market was lower due to the lack of technology stocks and lower demand for defensive stocks.

The bond markets experienced a roller coaster ride. The initial rally came to a halt when expectations for rapid interest rate cuts were adjusted. Nevertheless, bonds appreciated again in the third quarter due to the sharp fall in interest rates. In addition to the four interest rate cuts by the Swiss National Bank, the Fed also kicked off its interest rate reversal in September with a surprising cut of 50 basis points and announced further cuts – something that the markets received positively.

The price of gold regularly hit new record levels over the course of the year and recorded a remarkable increase. In addition to falling key interest rates, military conflicts, uncertain economic conditions and rising global debt also contributed to the precious metal’s soaring performance. In addition, emerging market central banks are increasingly shifting their US dollar holdings to gold. The property market also benefited from lower interest rates and became more attractive as lower financing costs supported the sector. In addition, the limited supply has a supportive effect while demand remains high. However, differences were also apparent here between the different market segments and regions.

Overall, the financial markets remained robust in 2024 despite many global challenges. Equities posted double-digit performances, while bonds and properties benefited from the turnaround in interest rates. However, thanks to the good performance of the equity markets, valuations have risen, which has narrowed the scope for upwards progression. Inflation rates continued to fall, but the pressure has eased. Various central banks have loosened their monetary policy to counteract the weaker economic momentum. These measures helped the financial markets to continue their positive development despite the initial economic weakness. Ultimately, it was the combination of monetary policy support and technological advances that favoured and enabled an above-average performance on the investment markets.

Investment activity/strategy

Assets invested by Ascaro amounted to 1,305 billion francs as of year-end. Broadly diversified, they are invested in Switzerland and abroad. In line with Ascaro’s strategic guidelines, foreign currency risks are hedged so that around 95 per cent of investments are held in Swiss francs as per the strategy. No significant changes were made to the positioning in the reporting year.

Asset structure

Development of performance

As of the end of 2024, investments had been made in the following asset classes: approximately 7 per cent in liquidity, 29 per cent in bonds, 23 per cent in equities, 39 per cent in real estate and 2 per cent in alternative investments.

In this market environment, Ascaro achieved a return of 5.31 per cent. Owing to our structurally more conservative approach, our performance on fixed assets is somewhat lower than that of the published benchmarks “UBS PK Performance” (7.62 per cent) or the “Pictet BVG 2015—25” index (7.99 per cent). Experience has shown that this balances out in difficult market phases.

As part of a study on the structure and development of pension obligations on the one hand and the return on assets required to achieve this goal on the other hand (asset/liability management) supervised by the independent consulting firm PPCmetrics AG, the Board of Trustees has adjusted the investment strategy moderately and in a slightly more risky way. The new strategy provides for allocations of 3 per cent to liquidity, 35 per cent to bonds, 24 per cent to equities and 38 per cent to real estate. Strategically, an allocation to alternative investments will now be dispensed with entirely. The resulting return and risk expectations thus perfectly match the long-term liability structure and are geared as best as possible towards financial stability. The revised strategy will be implemented gradually in 2025.

Technical bases, coverage ratio and interest on savings capital

At the beginning of 2022, due to the low interest rates, the Board of Trustees decided to set aside partial provisions for a further step-by-step reduction of the technical interest rate from 1.25 to 1.00 per cent. As interest rates in Switzerland are again moving towards zero, the Board of Trustees has now decided to fully accumulate the provision and subsequently reduce the technical interest rate to 1.00 per cent as of 31 December 2024. The technical interest rate specifies what long-term capital gains can be expected, in order to be able to finance the pensions. The interest rate depends on the expected performance of the financial markets.

With the achieved return of 5.31 per cent, the coverage ratio rose moderately to 113.53 per cent, compared to the previous year’s 113.50 per cent. The fluctuation reserves increased by a corresponding 10.0 million francs, in doing so strengthening Ascaro’s financial stability.

The Board of Trustees has decided on a further additional interest rate of 1.75 per cent for our active insured persons in view of the pleasing result. Together with the additional interest rate of 1.00 per cent already announced in June and the interest rate of 1.25 per cent set in advance (the minimum interest rate under the Occupational Pensions Act), this results in an interest rate on savings capital of 4.00 per cent in total for 2024 (or 3.00 per cent for policyholders who joined on 1 January 2024).

The Board of Trustees has set the interest rate on savings capital at 2.25 per cent in advance for 2025. This corresponds to 1.00 per cent more than the minimum interest rate under the Occupational Pensions Act (OPA) set by the Federal Council for the new year. The interest is paid by Ascaro on compulsory and supplementary assets for the whole year (even in the event of departure or retirement during the year). Thanks to the consistently solid interest rate, we have been able to pay an average interest rate of 3.70 per cent on savings over the past five years – a top figure for our beneficiaries!

Development of the coverage ratio since 2014

Board of Trustees, commissions, head office

The current term of office of the 12-member Board of Trustees ends in mid-2024 and several changes were on the agenda. While the allocation of the employer representatives is carried out by means of defined implementing provisions, the employee representatives are elected by the Delegates’ Meeting. The encouraging development of Ascaro had an impact on the distribution of employer seats on the Board of Trustees. Blaser Swisslube AG and Kunz Kunath AG now sat on the Board of Trustees with one employer representative each. They complement the companies Ascom Holding AG, Alluvia AG, SCOTT Sports AG and Asetronics AG, which have already been represented until now. The new election for the employee representatives took place on the occasion of the Delegates’ Meeting on 30 April 2024. Pleasingly, 11 candidates applied for the six Board of Trustees mandates, which underlines the interest in our foundation. Blaser Swisslube AG, Informaticon AG and the commune of Ettingen have now joined the Board of Trustees with one employee representative each. The current composition can be found in section 5.1.4 of this Annual Report. On behalf of all the beneficiaries, we would like to thank the departed Board of Trustee members for their committed work. We wish the new representatives much pleasure and success in their new roles.

Actively insured persons and pensioners

Interest rate for actively insured persons

The Board of Trustees attended to pending issues at four ordinary meetings and discussed the aforementioned asset/liability management study (ALM study) at a workshop, while individual items of business were discussed and prepared by the relevant expert committees.

The “Growth” objective defined in the corporate strategy lays the foundation for Ascaro’s external market positioning. “Growth – but not at any price” is our core motto internally, which is why we place a strong focus on “selective”, sustainable growth. We are delighted that two companies and – with them more than 350 active insured persons – have decided to switch their pension solution to Ascaro from 1 January 2025. As a result, for the first time in the history of being an open community enterprise, we have more active insured persons than people drawing pensions!

The office will continue on the path to “healthy” growth stipulated by the Board of Trustees with the aim of further improving the Foundation’s ability to restructure in the long term.

Going forward

The ongoing political and geopolitical uncertainties will continue to shape the financial markets in the new year. In particular, the trade restrictions expected from the US following Donald Trump’s return to the White House represent a factor of uncertainty. Interest rate developments and the future course of inflation also remain an important issue.

The positive annual result once again strengthened Ascaro’s financial position, and homework that had been pending to date was completed. For the Board of Trustees as the directing body, the financial stability of the occupational benefits scheme – and thus the long-term security of the pensions – continues to be paramount. The focus is also on growing the fluctuation reserves.

The Ascaro team will continue to act with foresight in the new year in our quest to master upcoming challenges.

We would like to thank you for the trust you have placed in Ascaro and its representatives and look forward to providing you with competent and professional support as your pension partner in the new year.

Bern, January 2025
Ascaro Vorsorgestiftung

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