Risk-bearing coverage ratio
The risk-bearing coverage attaches pension funds in Switzerland , the burden of risk carrier of a pension fund. It was developed by the Swiss consultancy PPCmetrics in 2011 and has since been used extensively by pension funds to assess their financial situation. The risk-bearing coverage ratio addresses the problem that the technical coverage ratio reported by Swiss pension funds in the annual report is only of limited informative value with regard to the financial situation and the burden on the risk takers. On the one hand, the technical coverage ratio makes a direct comparison between health insurers impossible due to the different high proportion of pensioners and the inconsistent assessment of pensioner obligations. On the other hand, it does not adequately reflect the effects of increases in interest rates, as only the negative effect of increases in interest rates on the asset side is taken into account.
Basic concept
The risk-bearing coverage ratio aims to neutralize different structures in pension funds and to uniformly assess the legally protected promises to pay to pensioners. Due to the statutory guarantee of current pensions, pensioners do not in principle bear any investment risks. Instead, the risk takers are the active insured and employers. In addition to the technical coverage ratio, the risk-bearing coverage ratio takes the following structural and accounting elements into account:
- Share of pensioners' pension capital as guaranteed benefits
- Amount of the technical interest rate used in the accounting
- Biometric basis used in accounting (period vs. generation tables)
calculation
The calculation of the risk-bearing coverage ratio takes place in two steps. In a first step, the assets of the actively insured are determined. For this purpose, the fixed pension obligations are uniformly valued using the current market interest rates and deducted from the existing plan assets (see figure). This results in the pension assets available to cover the claims of the active insured. In a second step, the coverage of the vested benefits management is calculated. For this purpose, the pension assets remaining for the actively insured are set in relation to the vested benefits .
Interpretation and limits
The risk-bearing coverage ratio shows the coverage of the non-guaranteed (ie “risk-bearing”) benefits and thus serves as an indicator of the burden on the risk takers. In principle, the following can apply: the higher the share of guaranteed pensions in total benefits, the more the risks are concentrated among the active insured. The risk-bearing coverage ratio thus creates transparency with regard to:
- Financing situation
- Risk exposure
- Comparability with other health insurers
However, the risk-bearing coverage ratio does not provide any information on the following issues:
- Distribution of risks among the risk takers, for example between different age groups
- Distribution of risks on the time axis
- Guarantees to the active insured, e.g. B. guaranteed conversion rates etc.
Separate calculations are required for each of these questions.
Individual evidence
- ^ Alfred Bühler, Marco Jost: Risk-bearing coverage ratio: More transparency for the situation of the active. (PDF) In: Swisscanto Pension Fund Study 2012, pp. 25–27.
- ↑ Othmar Simeon: Underwriting results - How well are the pension funds? (PDF) 2015
- ↑ Report on the financial situation of the pension funds ( memento of the original from March 24, 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) Supervision Commission for Occupational Pensions 2012
- ↑ Brigitte Terim, Susanne Hagenbucher: Technical vs. Economic coverage . In: Schweizer Personalvorsorge , 10/2005, pp. 76–80
- ↑ Lukas Riesen: Risk Analysis . Compare like with like. In: AWP Social Security . Issue 17/2013, p. 8 ( ppcmetrics.ch ).
- ↑ deckungsgrad.ch
