Financial situation
Fluctuations in the financial markets also continued in the first two months of the 4th quarter of 2018. This is also reflected at Vorsorge RUAG with a negative rate of return of -1.75%. Accordingly, since the beginning of the year, the coverage ratio before interest on retirement assets dropped from 103.3% to 100.6%.

Interest in 2018 and interest rate during the course of 2019
The negative rate of return leaves hardly any leeway when it comes to interest on retirement assets. Consequently, the Board of Trustees set a rate of 1.0% which is the same as the OPA (Occupational Pensions Act) minimum interest rate. Events throughout the year, such as withdrawals and retirements in the year 2019, will be credited with interest at a rate of 0.4%.  

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Our offices will be closed from 21 December 2018 up to and including 2 January 2019.   

We wish you a joyous festive season.

Amendments to regulations as at 1 January 2019: New occupational pension policy for variable salary elements 
With the amendments to regulations which come into force on 1 January 2019, the insurance of variable salary elements, such as shift premiums and bonuses, will be subject to new regulations and standardisation.

For employees involved in shift work, the shift premium will now be included in the insurance. This means that the amount of salary insured is increased, which will lead to improved retirement benefits and risk benefits.

The new occupational pension policy will lead further towards the standardised insurance of all bonuses with Vorsorge RUAG. The bonuses of insured parties with executive contracts of employment and insured parties with bonus- or sales-related contracts of employment will now be insured at a fixed rate according to the amount of the target bonus (with 100% target achievement).

In addition, Pension Fund Regulations have been amended to suit new legal regulations. Insured parties will be informed of the updates in the next few days by means of a personal letter.

Financial situation
Since the beginning of the year, the financial markets have been subject to large fluctuations, not least as a result of political turbulence. They only recovered moderately by the end of September. This is also reflected at Vorsorge RUAG with a negative rate of return of -1.15%. The coverage ratio has dropped correspondingly since the beginning of the year from 103.3% to 101.4% at the end of September.

No pension increase in 2019
By virtue of the current coverage ratio and limited risk-carrying capacity, the prerequisites are not in place for guaranteeing any inflation adjustment for retirement, disability, spouses' as well as children's pensions as at 1 January 2019.

2017 financial statements and annual report
The Foundation Board has approved the 2017 financial statements and annual report. The return on investment of 3.82% allowed the Foundation Board to pay 2% interest on the retirement assets in 2017. As such, the yield was, in line with target, higher than that of the pension capital, which was 1.25%. It was, however, also significantly above the minimum OPA interest of 1%. At the same time, it was possible to increase the legally prescribed reserve for financial market fluctuations. The coverage ratio thereby improved from 101.1% in the previous year to 103.3% as of 31 December 2017.

The regulatory changes of 1 January 2017 are already showing their effect. The lowered conversion rate allowed pension losses to be greatly reduced. It was possible to almost completely stop redistribution to the pensioners via the return of the active insured members. Whereas in 2017 this redistribution was approximately CHF 2.2 million, in the previous year almost 10 times as much - CHF 21.8 million - was needed for this purpose. In this way the active insured persons were able to benefit more from the investment returns achieved.

This and other interesting relationships and details can be found in the 2017 annual report. Those insured persons who requested a printed version will receive it in the post in the next few days.

Financial situation
In the first quarter of 2018, the financial markets experienced considerable fluctuations. All investment categories showed falls. This is also reflected by the negative return of Vorsorge RUAG of -1.49%. Correspondingly, the coverage ratio, which was at 103.3% at the start of the year, declined to 101.5% as of the end of March.

The current investment strategy is based on significantly lower equity market and currency risks than the Swiss average. The return of Vorsorge RUAG is therefore lower in a good equity year but better in a poor equity year than that of other Swiss pension funds.

Change in the Foundation Board
The RUAG Board of Directors has appointed Daniel Fürst, Vice President External Relations at RUAG Space as the new Employer's Representative on the Foundation Board of Vorsorge RUAG as of 1 May 2018. He succeeds Peter Scherrer, who is retiring and celebrating his 63rd birthday on the previous day.

Peter Scherrer, Vice President Special Projects at RUAG Aviation and Space, was appointed to the Foundation Board by the RUAG Board of Directors on 19 October 2005 and began his committed work on the Foundation Board on 1 January 2006. Six months later, he took on the role of Chairman. His chairmanship, which lasted over six years, was guided by his determination to guarantee the benefits of the insured members and the financial soundness of the fund. His principle, that “the benefits must not only be financed, but also be capable of being financed by employees and employers,” became the guiding precept of the Foundation Board and the Board of Directors when dealing with the pension fund on a day-to-day basis and as regards regulatory changes. At the beginning of 2013, he stepped down from the chairmanship; he was succeeded by Urs Kiener, Chief Financial Officer. To this day, the Foundation Board and Vorsorge RUAG have been able to count on Peter Scherrer's deep fund of knowledge. The Foundation Board and Board of Directors would like to offer him their sincere thanks for his great commitment to the well-being of the insured members and wish him all the best.