Pension funds defy the pandemic
4 October 2021
The cover ratio for Liechtenstein pension funds developed positively over the course of the pandemic year of 2020. All 17 pension funds registered a cover ratio of more than 100 percent. On average, this value rose from 113.5 percent to 114.0 percent in comparison with the prior year.
The 17 pension funds operating out of Liechtenstein insured a total of 43,894 people as at year-end 2020, the Financial Market Authority (FMA) of Liechtenstein writes in a press release covering the recent “Report on Occupational Pension Funds”. In comparison with the previous year, the number of insured parties rose by 564 people. As at end of the year, the number of insured persons was divided into 38,162 contributors and 5,732 pension recipients.
Despite the impacts of the coronavirus pandemic, pension funds in Liechtenstein have managed to increase their cover ratios in the reporting year. The average cover ratio rose from 113.5 percent to 114.0 percent year on year, the press release states. As such, all pension funds located in the Principality registered a cover ratio in excess of 100 percent. This means that the pension funds could cover all obligations out of their own funds in full.
In the middle of 2021, the average coverage ratio improved further to 119.2 percent, the analysts state. They also point to the high total value of pension fund assets as at the reporting date at the end of 2020. At 7.87 billion Swiss francs, this value corresponds to roughly 118 percent of the gross domestic product (GDP) of Liechtenstein.
In the reporting year, all pension funds were confronted with the challenges presented by the ongoing low interest rate environment, the FMA analysts explain further in the press release. On average, a yield of 3.7 percent was generated. The savings capital of the contributors achieved an interest rate of 2.0 percent, while the average pension conversion rate remained unchanged from the previous year at 5.8 percent. The total premium income of 444 million Swiss francs was offset by benefits paid out totaling 226.2 million Swiss francs in the year under review.