A survey by asset manager Swisscanto has revealed that the turmoil in capital markets in 2008 have led many Swiss pension funds to rethink their approach to securities lending.
The 13th Swisscanto survey found that post-2008, many funds were aware that the supposedly risk-free and temporary lending of securities contained dangers hitherto barely considered, such as counterparty risks, for which it may not be possible to compensate due to relatively low earnings. “Surveys on this issue show that smaller pension institutions have now largely withdrawn from securities lending and that many of the larger funds with over 1 billion Swiss francs in assets have also given up a significant part of this business,” said the study.
The present Swisscanto survey targeted 343 participating funds (previous year: 340), representing a total of 2.8 million beneficiaries (previous year: 2.5 million) and fund assets of CHF 481 billion (previous year: 437 billion) and focuses on the current state of occupational pensions in Switzerland, providing an insight into the structure, organization, investments and performance of the participating funds.