Information on the partial liquidation of the affiliated pension fund Aerospace.

Publication date: 25.11.2022

Financial situation
High inflation, rising interest rates, armed conflicts, persistent supply shortages and emerging recession fears are leading to losses in virtually all asset classes. Although the situation has improved somewhat in October, the investment markets are likely to continue to be subject to large fluctuations. As of the end of October, the return achieved by all employer affilitated pension funds was around minus 10%. The coverage ratio of all affiliated pension funds are above 100%. Therefore, no measures need to be taken and the pension funds can fulfil their obligations.  

Sustainable ESG* investment
The supreme bodies of the Livica Collective foundation have been working intensively on the complex issue of the sustainability of their assets. Among other things, an external, independent status report on current assets was compiled. The result is gratifying because the status report shows that Livica is also very well positioned in terms of sustainability. The corresponding report is available here.
*ESG = Environment, Social & Governanc

Changes in the Foundation Board
The Foundation Board had to accept the resignation of its Vice-Chairman, Dr. Christian Ferber, as of the end of the year. He is leaving Beyond Gravity. During his eleven-year tenure on the Foundation Board, the former Head of Human Resources of the RUAG Group and RUAG Beyond Gravity made a significant contribution to ensuring that the right topics were set at Livica based on a strategic vision. The process of finding a replacement has been initiated. The larger affilitated pension funds will be involved in the search process. 

Negative returns since beginning of year – coverage ratios above 100%
The base interest rate hikes initiated by various central banks aim to curb inflation and support the economy. The stock markets are reacting to this abrupt reversal of monetary policy with huge losses and bonds with a rise in returns. Further pronounced fluctuations on the investment markets are to be expected.

These events also have an impact on investment returns. As of end of September, the return achieved by all employer affiliated pension funds was around minus 12%. The coverage ratios of all affiliated pension funds are above 100%. No measures need to be taken and the affiliated pension funds can fulfil their obligations.

Negative returns since beginning of year – coverage ratios above 100%
The base interest rate hikes initiated by various central banks aim to curb inflation and support the economy. The stock markets are reacting to this abrupt reversal of monetary policy with huge losses and bonds with a rise in returns. Further pronounced fluctuations on the investment markets are to be expected.

These events also have an impact on investment returns. As of mid-June, the return achieved by all employer affiliated pension funds was around minus 12%. The coverage ratios of all affiliated pension funds are above 100%. No measures need to be taken and the affiliated pension funds can fulfil their obligations.

2021 annual report and annual financial statements
The Foundation Board approved the 2021 annual report and revised annual financial statements. They prove that 2021 was a pleasing investment year, with returns ranging from 8.7% to 9.2%. This allowed the pension plans to pay interest of up to 10% on their insured persons’ retirement assets. The most important figures are already available on our website. The full annual report including further information will be published in June.

A sluggish start to 2022
The current year is as sluggish as the previous investment year was pleasing. The reason for the market corrections is the uncertainties: the war in Ukraine with an unpredictable outcome, the economic crisis in China due to its zero-tolerance policy towards COVID-19, interest rate hikes in the USA and at other central banks, inflation and fears of a recession. These uncertainties are offset by a still intact economic environment. The 2022 investment year is expected to be shaped by strong fluctuations. 

As of the end of April, the return achieved at all employers’ pension plans was around minus 6.5%.  All affiliated pension funds have coverage ratios of more than 100%.

A successful year for the Livica Collective foundation
In 2021, the affiliated pension funds of the Livica Collective foundation generated very pleasing investment returns of between 8.7% and 9.2%. Thanks to the good returns, the affiliated pension funds have comfortable coverage ratios as of 31 December 2021. This enabled them to pay their insured persons up to 10% interest on their savings capital for 2021. On the one hand, the insured persons benefit thanks to the reorganisation as a collective foundation, and on the other hand, they benefit from the formation of the independent and fully funded pension fund with the insured persons who became pensioners up until 1 January 2020.

Livica will publish further information on the 2021 financial year in its annual report. The key figures are already available on our website. The 2021 consolidated annual report will be published in June.   

Ukraine conflict
Where the bonds held by us in investment funds in cash flow portfolios are concerned, the exposure of less than CHF 1.8 million is of minor importance in the overall context. In the case of Russian bonds, this represents CHF 1.72 million, or 0.07% of the total assets of around CHF 2.4 billion. The direct investments of the cash flow portfolios do not include any Russian or Ukrainian bonds.

In the global equities investment fund, there is an item of a Russian subsidiary listed in the United Kingdom amounting to a few thousand francs. At 0.0001% of total assets, this is also of minor significance. Livica does not hold direct investments in shares.

No Ukrainian securities are included in the total assets.

Livica is closely observing the situation and has stepped up its monitoring of investments. There is no immediate need to act. In spite of a current yield of around minus 4%, the financial stability of the pension fund is guaranteed and current pensions are secure.