Coverage ratio (pension fund)

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The coverage ratio is at pension funds in Switzerland have information as to what percentage of the obligations of a pension fund on a certain date with assets covered. There are various approaches to determination, which differ primarily in which obligations are included or excluded in the coverage ratio and according to which principle they are calculated. In general, a distinction is made between technical, economic and risk-bearing coverage ratio.

Legal basis

According to the appendix to Art. 44 of the Swiss Ordinance on Occupational Old-Age, Survivors' and Disability Pension Plans (BVV 2), this describes the relationship between net assets at market values ​​and technical obligations. When assessing the obligation, the principle of continuity must be taken into account in accordance with technical guideline 2 of the Chamber of Pension Fund Experts. Both the technical as well as the economic coverage ratio can be regarded as legal coverage ratios within the meaning of Art. 44, as long as the principle of continuity of valuation is guaranteed.

Technical coverage

The technical coverage ratio shows the relationship between net assets and actuarially assessed liabilities. The technical interest rate of a pension fund is used to discount the obligations. The different technical interest rates between pension funds result in an inconsistent assessment of the pensioner's obligations and make it difficult to compare different pension funds.

Economic coverage

According to the economic coverage ratio, both sides of the balance sheet are valued using the same methods. In particular, fixed obligations, such as current pensions, are discounted using risk-adjusted market interest rates. The economic coverage ratio answers the question of whether the promised and planned services are covered by capital at the time of the valuation.

Risk-bearing coverage ratio

The calculation of the risk-bearing coverage ratio takes place in two steps: First, the fixed pension obligations are uniformly valued based on the current market interest rates and deducted from the existing plan assets. This results in the pension assets available to cover the claims of the active insured. Second, the pension assets remaining for the active insured are set in relation to the vested benefits . The risk-bearing coverage ratio serves as a measure of the risk exposure of the risk takers.

Individual evidence

  1. ↑ Olivia Gradenwitz: Degree of coverage . In: Specialized dictionary for occupational pensions . VPS Verlag 2010.
  2. ↑ a b Marco Jost and Urs Burch: Coverage and their significance. More transparency or just confusion? (PDF). In: Schweizer Personalvorsorge 1/2014, pp. 13–16
  3. ↑ Ordinance on Occupational Retirement, Survivors' and Disability Pension Plans (BVV2) (PDF)
  4. ↑ Coverage ratio calculation in accordance with Art. 44 BVV2 ( Memento of the original from March 6, 2014 in the Internet Archive ) Info: The archive link has been inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. (PDF)  @1@ 2Template: Webachiv / IABot / pension-actuaries.ch
  5. ↑ FRP 2 Pension Funds and Technical Provisions ( Memento of the original from March 6, 2014 in the Internet Archive ) Info: The archive link was automatically inserted and not yet checked. Please check the original and archive link according to the instructions and then remove this notice. (PDF)  @1@ 2Template: Webachiv / IABot / pension-actuaries.ch
  6. ↑ Alfred Bühler and Marco Jost: Introduction of an economic pension assessment part 1 - technical guideline technical interest rate . In: Schweizer Personalvorsorge 5/2011 , pp. 67–68
  7. ↑ a b Lukas Riesen: Risk Analysis . Compare like with like. In: AWP Social Security . Issue 17/2013, p. 8 ( ppcmetrics.ch ).