Pension Fund General Electric Switzerland. Information for employees

Transcription

1 Pension Fund General Electric Switzerland

2 Agenda 1 Organisation & Fundamentals 2 Investment Strategy & Performance 3 Challenges & Action Plan 4 GE Integration Impact on PF/SIP 5 Further information 6 Questions & answers 2

3 Organisation of ALSTOM Switzerland PF & SIP Supervision Implementation Consulting Pension Experts Pittet Associates AG Investment Consultants PPCMetrics AG Management/ administration Avadis Vorsorge AG BOARD OF TRUSTEES Asset management Avadis Investment Foundation Auditors PwC Cantonal Supervision 30-May-17 3

4 Board of Trustees as of Pension Fund Employer representatives Employee representatives Alexander Mihajlovic (Chairman) Dana Kiefer Marcel Mueller Michael Rechsteiner Peter Rosa Hans-Jürg Harder (Vice Chairman) Martin Aronsky Christoph Hasler Roland Hug Peter Renz SIP Employer representatives Employee representatives Alexander Mihajlovic (Chairman) Hans-Jürg Harder (Vice Chairman) Michael Rechsteiner Peter Rosa 4

5 Savings capital Fundamental principles of the Pension Fund Schematic pension calculation (1/2) Conversion into pension Age as of 1 January = Employee contributions Employer contributions Interest Savings capital Age 65 (retirement) Savings capital upon retirement x CR = Pension 5

6 Savings capital Fundamental principles of the Pension Fund Schematic pension calculation (2/2) Effect from contribution table Standard plus incl. compound interest effect Conversion into pension Age as of 1 January = Employee contributions Employer contributions Interest Savings capital Age 65 (retirement) Savings capital upon retirement x CR = Pension Pension from contribution table Standard plus 6

7 Fundamental principles of the Pension Fund Investment return - Employee contributions - Employer contributions - Deposits Water level = coverage ratio Savings capital active members vs. coverage capital pensioners (reallocation) - Pensions - Capital - Vested benefits - Costs 7

8 Fundamental principles of the Pension Fund Actuarial interest rate: Long-term / must be below the expected return by an appropriate margin Interest on accrued savings capital: Short-term / depends on Pension Fund s financial situation Target return: Short- or long-term (depends on definition) Target return = f (actuarial interest rate, interest, ratio of coverage capital to savings capital, life expectancy, administrative expenses) 8

9 Fundamental principles of the Pension Fund Expected return: Long-term / depends on investment strategy and/or asset allocation, interest environment and corresponding risk premiums for equities and alternative investments, in decline since 2008 (market!) Risk contributions: Financing of active members risk benefits (death and disability) Financing of retirement costs (specificity of the Pension Fund GE) 9

10 Fundamental principles of the Pension Fund Coverage ratio > 120% Net pension plan assets Free funds Value fluctuation reserve Actuarial reserves Pension plan capital pension recipients Pension plan capital active members Coverage ratio > 100% Net pension plan assets Value fluctuation reserve Actuarial reserves Pension plan capital pension recipients Pension plan capital active members Coverage ratio < 100% Underfunding Net pension plan assets Actuarial reserves Pension plan capital pension recipients Pension plan capital active members Assets Liabilities Assets Liabilities Assets Liabilities 10

11 Agenda 1 Performance Organization & Fundamentals 2 Investment Strategy & Performance 3 Challenges & Action Plan 4 GE Integration Impact on PF/SIP 5 Further information 6 Questions & answers 11

12 Key figures Pension Fund 31/12/ /12/2015 Capital assets 1,621 m 1,616 m Members 4,105 5,149 Pensioners* 1,137 1,063 Proportion of pensioners in %* 21.7% 17.1% Contributions 79.0 m 84.7 m Pension benefits p.a m 35.4 m Actuarial interest rate 2.00% 2.25% Conversion rate at age % 6.30% Coverage ratio 117.2% 116.8% *excl. child benefits/orphan s benefits 12

13 Key figures Supplementary Insurance Plan 31/12/ /12/2015 Capital assets 184 m 175 m Members 1,308 1,410 Pensioners* Proportion of pensioners in %* 15.6% 13.6% Contributions 16.4 m 17.3 m Pension benefits p.a. 3.1 m 2.8 m Actuarial interest rate 1.75% 2.25% Conversion rate at age % 6.30% Coverage ratio 112.1% 112.9% *excl. child benefits/orphan s pensions 13

14 Investment strategy (PF unchanged) as per 31 December 2016 PF in % In kchf SIP in % In kchf CHF liquidity , ,304 Bonds CHF , ,072 Foreign curr. gov. bonds (hedged) , ,515 Foreign curr. corp. bonds (hedged) 5 82, ,219 Emerging markets debt 3 50, ,980 CH equities 7 116, ,842 Foreign equities (hedged) , ,100 Emerging markets equities 5 84, ,097 Private equity 2 18, ,844 Swiss real estate , ,475 Foreign real estate 3 52, ,836 14

15 Investment strategy returns 2016 PF in % Return SIP in % Return CHF liquidity % % Bonds CHF % % Foreign curr. gov. bonds (hedged) % % Foreign curr. corp. bonds (hedged) % % Emerging markets debt % % CH equities % % Foreign equities (hedged) % % Emerging markets equities % % Private equity % % Swiss real estate % % Foreign real estate % % 15

16 Percent Total return on asset investment 8 years of positive return Ø PK EV

17 Coverage ratio PK EV

18 Pension Fund returns: annual performance in CHF 15% 10% 5% 0% -5% -13.3% 10.9% 10.6% 11.8% 7.0% 3.7% 2.7% -0.5% 0.0% 3.0% -0.6% 7.9% 7.2% 5.9% 6.4% 5.8% 7.7% 7.9% 0.8% 0.7% 7.4% 1.0% 3.4% 3.9% -10% -15% -20% -12.9% -15.6% UBS PK-Barometer CS PK-Index ASIP Quelle: UBS PK-Barometer, 2016, CS PK-Index, ASIP (bis 2015) 18

19 Coverage ratio Comparison with other pension funds PK General Electric Swisscanto Swisscanto: privatrechtliche Pensionskassen 19

20 Agenda 1 Organization & Fundamentals 2 Investment Strategy & Performance 3 Challenges & Action Plan 4 GE Integration Impact on PF/SIP 5 Further information 6 Questions & answers 20

21 Interest rate development Return federal bonds, LOB minimum interest rate and actuarial interest rate 10 yr government bonds Actuarial interest rate (average PF) Correlating expected yield to match LOB minimum interest rate Expected long term return of PF = LOB (BVG) minimum interest rate 21

22 Current interest rate environment (CHF interest curve in %) M 3M 6M 1Y 2Y 3Y 4Y 5Y 6Y 7Y 8Y 9Y 10Y 12Y 15Y 20Y 25Y 30Y "Brexit" Quelle: Bloomberg 22

23 Promised interest rates resulting from conversion rate Conversion rate, implicit actuarial interest rate Men born in 1957, age % 6.00% 5.00% 4.00% 6.50% 6.10% 5.80% 5.50% 5.10% 4.80% 4.50% 4.20% 3.00% 2.00% 1.00% 0.00% 4.50% 4.00% 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% AV 2020 CR 6% Expected return according to investment strategy 23

24 Development of conversion rate Further reduction of conversion rate is necessary from 2018 / currently set until

25 New actuarial bases (actuarial life tables) including age pyramid: actuarial bases LPP 2015 Actuarial principles LOB May-17 25

26 Impact of insufficient returns / increasing life expectancy Actuarial interest rate is not generated Effective time of death Statistical time of death Retirement Losses due to lower returns than actuarial interest rate Losses due to increasing life expectancy 26

27 Life expectancy as a challenge Average life expectancy after age Men Women Natural retirement age

28 Possible measures - Workshop for Board of Trustees from 7 March Results of the workshop: measures which can be taken by members themselves - 1. Take advantage of buy-in potential: In 2016, only about 6% of members effected a buy-in - 2. Change to contribution table Standard plus: As of 31 December 2016, only about 14% of members had chosen the highest contribution table 28

29 In MCHF 1. The individual buy-in potential could / should be realised to a higher degree - Compound interest effect - Current buy-in potential (golden rule) Sparkapital und Einkaufsmöglichkeiten per Alter gemäss Einkaufstabelle % 44% 45% 46% 52% 44% 43% 49% 54% 52% 48% 47% 41% 44% 40% 40% 40% 40% 42% 49% Max mögliches Sparkapital Verfügbares Altersguthaben 29

30 1. The individual buy-in potential could / should be realised to a higher degree Members are entitled to effect buy-ins into the Pension Fund. According to their personal situation, they can close pension gaps improve their retirement benefits save taxes 30

31 2. Change to contribution table Standard plus This measure enables members to increase their savings contribution. Thus retirement benefits are improved the buy-in potential is increased 31

32 Action Plan Review of actuarial interest rate (provision for 1.75% already introduced in 2016) - Review of investment strategy - Additional concepts to improve benefits at retirement age - Simulation tool for website - Information campaign (vote in Switzerland) 32

33 Agenda 1 Performance Organization & Fundamentals 2 Investment Strategy & Performance 3 Challenges & Action Plan 4 GE Integration Impact on PF/SIP 5 Further information 6 Questions & answers 33

34 GE takeover impact on PF/SIP Departure of Ansaldo Energia Switzerland as per 31 December 2016 Total of 434 active members + 2 pensioners Consequence: partial liquidation as per 31 December 2016 No free funds no individual allocation Impact of restructuring Impact on proportion active members/pensioners Consequence: partial liquidation as per 31 December 2016 No free funds no individual allocation 34

35 Agenda 1 Performance Organization & Fundamentals 2 Investment Strategy & Performance 3 Challenges & Action Plan 4 GE Integration Impact on PF/SIP 5 Further information 6 Questions & answers 35

36 Homepage: 36

37 Homepage: 37

38 Management Managing Director Jacky Baula T jacky.baula@avadis.ch Deputy Managing Director Marion Fischer T marion.fischer@avadis.ch 38

39 Avadis team (advice for active members) Last name A F Michael Jakob T michael.jakob@avadis.ch Last name I P Stéphanie Vögeli T stephanie.voegeli@avadis.ch Last name G H Jolanda Cattoni T jolanda.cattoni@avadis.ch Last name Q V Tobias Steiger T tobias.steiger@avadis.ch Last name W Z Sabrina Piccinno T sabrina.piccinno@avadis.ch 39

40 Avadis team (advice for pensioners) Telephone

41 Agenda 1 Performance Organization & Fundamentals 2 Investment Strategy & Performance 3 Challenges & Action Plan 4 GE Integration Impact on PF/SIP 5 Further information 6 Questions & answers 41

42 Any questions?

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