At Zwitserleven you accrue pension by means of investing. Your pension payment is therefore dependent on the return on your pension capital. Via this message we inform you shortly about market developments in 2022 and what the return has been on the funds over the year 2022.
Market developments in 2022
Fast increasing inflation and a reduction of support from governments and central banks were characteristics for 2022. Due to the reduction of government support, interest rates increased. One of the causes of the rising inflation was Russia’s invasion of Ukraine at the beginning of the year. This caused a significant increase of energy prices. In addition, after the covid lockdowns, consumption was strong, which created shortages that increased even further due to the war in Ukraine. Equity and bond markets performed moderately in 2022.
Smart Investing
We make sure that your pension investments match your age and income. Are you relatively young, then you are automatically investing more in the Rendement fund which is targeted at reaching a high return. The returns are needed in order to accrue a sufficient pension. The closer you get to your retirement date, the more you invest in the Matching funds. The objective of these funds is to keep the chance of setbacks as low as possible.
Since less money is needed for the same expected pension at a higher interest rate, a negative return on your Matching funds does not immediately mean a lower pension! Due to sharply increased interest rates, your expected pension may even have increased despite the negative return. You can read more about our investment funds further on.
You use your invested money with us to buy a pension with an insurer of your choice when you retire. You hand over the pension capital to an insurance company and will receive a lifelong monthly pension for that.
Below you can find an overview of the achieved returns on our investment funds, both on the year 2022 as since the start of the investment funds (4 November 2014). The achieved fund returns will be compared to the returns of the fund benchmark, a measure of performance to compare and assess the returns of our funds.
All shown investment returns are before deducting the yearly fund costs (OCF) and after deducting all transaction costs.
| 2022 fund return |
2022 return benchmark | Since start fund return (on a yearly basis) |
Since start return benchmark (on a yearly basis) |
|
| Matching Kort fund | -17.0% | -16.5% | 1.0% | 0.8% |
| Matching Lang fund | -32.9% | -28.9% | 1.9% | 2.3% |
| Rendement fund | -14% | -12.8% | 6.5% | 6.3% |
Rendement fund
This fund invests in a group of different investment funds with a goal to reach a good return at reasonable risk. We do not invest itself but choose the best asset managers to invest your money in the Rendement fund.
Rising interest rates, reduced support from governments and central banks, the war in Ukraine and inflation have had a significant impact on the markets. The underlying funds of the Rendement Fonds therefore achieved a negative investment result in 2022. When choosing asset managers, we also take sustainability into account. That is why we exclude some investments in the non-sustainable energy sector. As a result, the Rendement fund was unable to benefit from the profits made by some oil and gas companies. The declining markets in general and the choice to invest less in non-sustainable energy resulted in a return of -14%.
Matching Funds
You invest more and more in the Matching funds the closer you get to your retirement age. These investment funds mainly contain French and German government bonds.
The goal of these funds is to keep the risk of a setback as low as possible such that your expected pension will probably closely match the pension you can buy at an insurer. Setbacks may occur when interest rates decrease or prices increase (inflation) in the period before retirement. With higher interest rates the insurers demand less capital for the same pension payment. With increasing inflation you can buy less of the same pension as all becomes more expensive. Therefore, the benchmark of your Matching funds is linked to the tariffs of the insurers for converting your capital to a monthly payment with indexation based on inflation.
In 2022, interest rates increased. Strong increasing interest rates have a major negative effect on the value of the bonds in the Matching funds. On the other hand, your pension provider needs less money at a higher interest rate to pay you the same pension. A significant negative return on your matching funds does not immediately mean a lower pension. Increasing interest rates may even mean that your expected pension will be the same or even higher.
Increasing inflation in 2022 had a positive effect on the value of Matching funds. On balance, the negative effect of the increasing interest rate has been bigger than the positive effect of the increased inflation, so overall the return is negative.
The effect of changes in interest and inflation is larger for bonds with a longer duration. As such, the return on the Matching Lang fund in 2022 was lower than for the Matching Kort fund.
The Matching Lang fund achieved a negative return of -32,9%. The Matching Kort fund achieved a negative investment return of -17%.
Compared to the benchmark funds, the performance of the Matching funds has been worse this year. This picture, however, varies from year to year. This is mainly due to the fact that the interest rate on inflation-linked government bonds, in which the fund invests, does not always react equally to a change in the interest rate and inflation used for the insurers’ purchase rate (the benchmark) due to supply and demand in the market. Measured since inception, the performance of the Matching Kort fund is now 0.2% per year above the benchmark used and the performance. The Matching Lang fund is now -0.4% below the benchmark.
Return on your pension capital
You can find your personal current annual return and your personal investment mix under My Investments on your participant portal. You can see a forecast of your expected pension benefit in your Dasboard.
More information and Self Investing
For more information on the investment funds and the returns of the Self Investing funds, visit the factsheets.