Financial situation
The interest on Swiss Government Bonds with a 10-year term have dropped since the beginning of the year from minus 0.15% to a record low of minus 0.98% in August. They recovered slightly in September with a rise to minus 0.76%. The interest situation for pension funds is still critical. In any event, the current environment means we can conclude that interest rates will continue to remain low. As a consequence of the drop in interest rates, the market value of bonds has risen, which is a main contributor to the total return of 9.08% as at the end of October. Shares and real estate have contributed 3.5%. The coverage ratio rose from 101.1% at the end of 2018 to 106.6% as at 31 October 2019.

Interest in 2019 and interest rate during the course of 2020
In spite of a pleasing rate of return of 9.08% at the end of October and a correspondingly higher coverage ratio of 106.6%, the structural risk-carrying capacity is not fulfilled. This can only be achieved with a target coverage ratio and adequate value fluctuation reserve of 117%. With 1.5%, the Foundation Board nevertheless specified an interest rate that lies above the minimum OPA (Occupational Pensions Act) rate of 1.0%.  Events throughout the year, such as withdrawals and retirements, will be credited with interest in the year 2020 at a rate of 0.4%, just like the previous year.  

Collective foundation
The unbundling of the RUAG Group necessitates a new organisational and structural direction from VORSORGE RUAG as the collective foundation. In this respect, the Foundation Board approved both the foundation certificate and affiliation agreements, as well the rebranding and image of the collective foundation.  

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Our offices will be closed from 23 December 2019 up to and including 5 January 2020.  

We wish you a joyous festive season.

Financial situation
Interest on 10-year Swiss Government Bonds reached a record low in August with minus 0.98%. In addition, contrary to the norm, one-year bonds yielded a better return than 10-year bonds. In any event, the environment means we can conclude that interest rates will continue to remain low. This resulted in a positive total return of 11.3% at the end of August. Bonds contributed 7.5% and shares as well as real estate 3.8%. The coverage ratio has increased from 101.1% at the end of 2018 to 105.0%.

No pension increase in 2020
In spite of the current actuarial coverage ratio, the risk-carrying capacity of Vorsorge RUAG is limited. Therefore, the prerequisites for granting an inflation adjustment for old-age, disability, spouse's as well as children's pensions as of 1 January 2020 have not been met.

Integration of Kadervorsorge RUAG
The BBSA Supervisory Board for Foundations has approved with an ordinance the merger of Kadervorsorge RUAG with Vorsorge RUAG as of 1 January 2019 as well as the plan for the distribution of the assets of Kadervorsorge RUAG. The former insured parties of Kadervorsorge (the management pension scheme) will be informed of the distribution of funds with a personal letter in the next few weeks.

Vorsorge RUAG becomes a collective foundation
This unbundling will also have an impact on Vorsorge RUAG, which will align its organisational structure as a collective foundation with RUAG’s new Group structure.

An unchanged pension plan will be offered to insured parties in the new organisational units of the unbundled RUAG. Benefits will not be affected by this process. It will now be possible for companies which are partially or fully sold by RUAG to remain affiliated with Vorsorge RUAG.

Consequently, RUAG’s unbundling will merely result in organisational changes for insured persons in terms of occupational pension schemes.

The Foundation Board has developed the necessary organisational concept for this realignment procedure. Changes to rules and contracts will be effected by the end of the year. In the coming weeks, the Chairman of the Employee Representatives and HR Manager will be informed of the current status of progress and will discuss the processes necessary for the starting line-up, implementation and synchronisation with RUAG's unbundling project. 

Financial situation
The financial markets developed well up to the end of April 2019. This is also reflected at Vorsorge RUAG with a positive rate of return of 5.24%. The coverage ratio has increased correspondingly from 101.1% at the end of 2018 to 105% now.

Change in the Foundation Board
Peter Probst, the employee representative on the Foundation Board, stepped down on 30 April 2019. In its capacity as the responsible election body, the Employee Representative Presidents' Conference of RUAG Switzerland elected Guido Zwyssig as his successor until the expiry of the regular period of office. He is Senior Manager Controlling & Finance at MRO International. The Foundation Board sincerely congratulates Guido Zwyssig on his election and wishes him every success. Peter Probst was thanked for his contributions on his departure.

The Foundation Board of Vorsorge RUAG has performed an in-depth analysis of the Swiss Federal Council’s decision to unbundle RUAG and the associated consequences for Vorsorge RUAG.

Vorsorge RUAG will align its organisational structure as a collective foundation to RUAG’s new Group structure. It will reposition itself by the end of the year.

An unchanged pension plan will be offered to insured persons in the new organisational units of the unbundled RUAG. It will now be possible for companies which are partially or fully sold by RUAG to remain affiliated with Vorsorge RUAG.

So RUAG’s unbundling will merely result in organisational changes for insured persons in terms of occupational pension schemes. Benefits will not be affected by this process.

The work involved in the realignment is extremely challenging; it is already underway. Further and more detailed information will be provided in due course.

Integration of Kadervorsorge RUAG
In a letter dated November 2018, the insured persons were informed of the amendments to the Regulations as of 1 January 2019. The main focus was on insuring variable salary components like shift premiums and bonuses that became subject to new regulations and standardised.

Because the bonuses for all employees with and without a management contract will be insured with Vorsorge RUAG backdated to 1 January 2019, the logical consequence of this is that Kadervorsorge RUAG, which is designed to complement Vorsorge RUAG, will be integrated into Vorsorge RUAG by means of a merger.

Both foundation boards approved the merger contract and merger report, as well as the merger balance sheet, at their respective meetings on 25 April 2019. Kadervorsorge RUAG is going to be merged with Vorsorge RUAG, backdated to 1 January 2019, within the meaning of Art. 88 et seq. of the Mergers Act (MergA). It thus assumes all rights and obligations of Kadervorsorge RUAG. Both the purpose of the pension fund and the rights and obligations of the insured persons will remain protected.

Both the pension fund assets and the pension fund capital will be retained at the time of the merger. Based on the identical methods and basic principles for drawing up the merger balance sheet, the rights and entitlements of insured persons will remain the same – no disadvantages will be created.

In accordance with Art. 93 of the Mergers Act, insured persons have the right to inspect the merger documents.

You are entitled to exercise this right of inspection between 1 and 31 May 2019 during the company’s opening hours and by prior appointment (031 330 21 11) at the registered office of Vorsorge RUAG, Stauffacherstrasse 65, 3014 Bern.

2018 financial statements and annual reportThe Foundation Board has approved the 2018 financial statements and annual report. The return of minus 2.12% left virtually no leeway where interest on the retirement assets was concerned. The Foundation Board therefore set the interest rate for 2018 in line with the minimum interest rate under the Occupational Pensions Act (OPA) of 1.0%. The coverage ratio dropped from 103.3 % in the previous year to 101.1 % as of 31 December 2018. The 2018 Annual Report can be downloaded from our website effective immediately. Anyone who requested a printed copy will be posted the report from mid-May 2019 onwards.