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com plan annual report
1 com plan 2018 annual report
2 20th Annual Report We are there for you Monday to Friday 8.30 a.m. to / until 12 p.m. Telephone Telefax Stadtbachstrasse 36, 3012 Bern Internet: complan Online:
3 Table of contents Table of contents 1 Foreword 2 Organizational structure 4 Important key figures 5 Appendices 6 Balance sheet 9 Operating account 10 Appendix to the annual financial statements Basic principles and organization 16 2 Active insured persons and pensioners 16 3 Pension plan and its financing 17 4 Valuation and accounting principles, consistency 18 5 Insurance-related information 21 6 Explanation investments and the net result on investments 26 7 Explanation of the investments made by the employer and the employer's contribution reserve 27 8 Explanation of other items in the balance sheet and the operating account 28 9 Requirements of the supervisory authority Further information relating to the financial situation Experts in occupational pensions 30 Report of the statutory auditor 32
4 Foreword Dear fully insured persons, esteemed pensioners After the extraordinarily good investment year 2017, the 2018 financial year was characterized by negative developments on most international capital markets. The good and broad-based economic growth in Switzerland and in numerous large industrialized countries could not prevent this tendency. In the USA the interest rate turnaround occurred with a total of four key rate hikes. Europe and Switzerland are lagging behind in the cycle. This positive picture in the real economy was overshadowed by the escalating trade dispute between the USA and China and the tensions in connection with Great Britain's exit from the European Union (Brexit). In Switzerland, the differences in connection with the framework agreement with the European Union in particular led to uncertainty. Turkey and Argentina, two of the major emerging countries, were facing considerable economic problems. In addition, various raw material prices fell. Rising USD interest rates and geopolitical uncertainties led to negative price developments in many investment markets. Financial situation complan achieved an overall negative return on investment of -3.1% in 2018. This is slightly below the benchmark return of -2.9%. As a result, the target return for the long-term financing of the pension obligations was not achieved and the coverage ratio deteriorated from 107.7% as of December 31, 2017 to 103.1% as of December 31, The fluctuation reserve, our reserves for price fluctuations in investments, decreased and the effective coverage ratio moved further away from the target coverage ratio for long-term assurance of the promised pension benefits of 117.5%. Interest on retirement assets 2 Foreword Due to the lower funding ratio and the negative investment return, the Board of Trustees unanimously decided to pay interest on the retirement assets of the active insured in the 2018 financial year at an interest rate of 1.0%. This corresponded to the BVG minimum interest rate. In comparison to the current savings interest rates from banks of almost 0%, this interest rate is still attractive. A higher interest rate could not be justified because the target coverage ratio has still not been achieved. Furthermore, in the 2019 financial year, the retirement assets will earn interest during the year at the BVG minimum interest rate of 1.0% and the current old-age, disability and survivors' pensions will not be increased as of January 1, 2019. The long-term safeguarding of existing pension promises remains at the center of complan activities. Adjustment of the investments The composition of the investments was adjusted slightly due to a review of the investment strategy in the 2018 financial year. In particular, the unhedged foreign currencies were increased from 12% of the plan assets to 15%. In terms of equity investments, Swiss shares were increased at the expense of EM world shares (emerging markets). In the Real Estate World investment category, more investments were made in unlisted funds and real estate stocks were reduced. The next review of the investment strategy will take place as part of a comprehensive analysis of the expected future development of pension obligations and pension assets (asset & liability study). This is planned from autumn 2019.
5 Operational adjustment of the pension regulations In September 2018, the Board of Trustees passed numerous changes to the pension regulations, which came into force on January 1, 2019. These adjustments only include clarifications and simplifications of the existing pension fund regulations as well as adjustments based on current decisions of the Federal Supreme Court, which are binding for all pension institutions. For example, the insurance of monthly fluctuating wages (e.g. hourly wages) has been regulated more precisely or the reporting period for lump-sum withdrawals upon retirement has been shortened from three months to one month. Elections to the Board of Trustees In November 2018, there were new elections for the employee representatives on the Board of Trustees for the 2019 to 2022 term of office. 16 different candidates could be chosen from six electoral lists. The ballot was carried out digitally for the first time, i.e. all active insured persons could cast their votes anonymously via a secure Internet website. The election result and the allocation of seats were evaluated directly on the basis of these inputs. The following were elected: Giorgio Pardini, Dolkar Hofmann, Alfred Wyler, Hans-Peter Sutter, Yannick Loigerot (all five from the list «syndicom»), Susanna Walker (list «transfair the staff association for the public service») and Meret Meier (list « The future takes responsibility »). We congratulate those elected on their election and wish them every success in their office. Outlook Switzerland and many of our most important trading partners expect lower economic growth in 2019 than in the previous year. With the framework agreement between Switzerland and the European Union, the unresolved trade conflict between the USA and China and the Brexit uncertainties, there are still greater risks of setbacks. In addition, various investment markets are still highly valued and the effects of the central banks' exit from the ultra-expansionary monetary policy are unknown. complan will not be able to escape this development. Thanks to the broadly diversified investment strategy and careful management of the investment risks, complan is well equipped to cushion any corrections in the financial markets. On the pensions side, the “AHV 2021” in particular will be discussed more intensively in 2019. The aim is to secure the financing of the AHV benefits in the medium term. In the area of occupational pensions, it is above all the social partners at the federal level that will be called upon to work out a solution that is suitable for a majority. On the basis of the decisions of the Board of Trustees of September 20, 2016, the conversion rates for full benefits will be further reduced at complan 2019 in accordance with the regulations and at the same time the special deposits will be credited monthly to the individual retirement assets. The transition period for the reduction in the conversion rate lasts until September 2020, that for the special deposits until June. Special thanks are due to the members of the Board of Trustees, the Investment Committee and the employees of the complan office. We would also like to thank our partners in asset management, the recognized experts in occupational pensions, the auditors and the legal advisors for their support, who have contributed to the success of our business activities. Finally, we would like to thank the active insured and pensioners as well as the affiliated employer companies for the trust they have shown in the Board of Trustees and the management. 3 Foreword Urs Schaffner Alfred Wyler Mario Rossi Managing Director President of the Board of Trustees Vice President
6 Organizational structure Organization complan as of 1.
7 Key figures Portfolio data Number of active insured persons (before the age of 22) Number of active insured persons (from age 22) Average age of active insured persons Number of retirement pensions Average age of retirees Number of disability pensions Number of spouse / partner pensions Number of divorce pensions 10 3 Number of child pensions Total active insured persons and pensioners Annual administrative costs per insured person CHF Number of affiliated employers Balance sheet information Balance sheet total CHF million Pension capital, active insured CHF million Pension capital, pensioners CHF million Technical provisions CHF million Value fluctuation reserve CHF million Free funds (underfunding) CHF million Coverage ratio Coverage ratio 103.1% 107.7% Target coverage ratio 117 .5% 117.8% reserve deficit 14.4% 10.1% reserve deficit CHF million return on investment Return on investment after costs 3.07% 9.33% interest on pension capital for active insured persons 1.00% 1.50% technical interest on pensioner capital 2, 00% 2.00% Pension increases Important cash flows Insured salary Total CHF million employee contributions CHF million employer contributions CHF million old-age pensions CHF million survivors' pensions CHF million disability pensions CHF million capital and other benefits CHF million key figures
8 Investments Financial markets in 2018 In the 2018 financial year, prices on most financial markets developed negatively. The main reason was the change in risk perception towards the end of the year. The robust global economic development continued steadily in the first three quarters. Driven by tax breaks and the upswing in private consumption, US GDP grew strongly and the employment rate reached record highs. The US central bank used the leeway and raised short-term key interest rates in US dollars four times by a total of + 1.0%. In the eurozone, economic developments were somewhat more subdued and key interest rates in euros remained unchanged. In the fourth quarter, the risks on the financial markets increased increasingly. The focus was on the escalating trade dispute between the USA and China, the UK's uncoordinated exit from the European Union (Brexit) and the debt situation in Italy. From October 2018 onwards, market participants increasingly asked for government bonds, some of which had negative yields to maturity, which put pressure on long-term interest rates. In the USA, this left the 10-year rate only with an increase of + 0.3% over the course of the year (see dark blue line in the graph). The economic development in Switzerland in 2018 lay between the USA and Europe. The positive development on the labor market also continued in Switzerland, but GDP growth flattened somewhat in the second half of the year. After a small upward movement at the beginning of the year, interest rates in Swiss francs fell again in the fourth quarter. At the end of the year, the 10-year rate was still clearly negative at -0.25% (see light blue line in the graph). The increasing risks led to stronger price corrections for equity investments from the fourth quarter (see gray line in the graph). When it comes to investments in emerging markets (EM), the crisis of confidence in Turkey and Argentina made things even more difficult. The combination of rising US dollar interest rates and higher credit spreads also led to lower market prices for credit investments. Positive returns have been achieved with variable rate loans, unlisted real estate or private market investments. Market development 5 years (interest and shares) Investments Management of pension assets Interest 10 years US Treasury (left axis) Interest 10 years Confederation (left axis) MSCI World Index CHF hedged (right axis) Management of the pension assets is solely based on the interests of the insured in the foreground. In this context, the organs of complan pursue the following goals:> Generating long-term income, taking into account the risk capacity and willingness to take risks> Fulfilling financial obligations on time and on time> Ensuring the nominal and, as far as possible, real value retention of the pension funds The Board of Trustees sets out a comprehensive asset and Liability Study (ALM) defines an investment strategy as well as tactical bandwidths that ensure the best possible achievement of the above-mentioned goals and commissions the investment committee and the office to implement it. They commission external specialists for the operational management of the pension assets. The office and the independent investment controller, in cooperation with the central custodian, continuously monitor the asset development and the investment returns of all asset management mandates. They prepare regular reports for the Board of Trustees and the Investment Committee.
9 Changes to investments In 2018, the investment strategy was reviewed as standard and optimizations were made, which continue the continuous development with broader diversification. In particular, the unsecured foreign currency investments were increased from 12% to 15% of the plan assets. In the case of government bonds World Emerging Markets (emerging countries), bonds in local currencies were also taken out with a new asset manager. In terms of equity investments, a new asset manager expanded from medium to small capitalized Swiss equities at the expense of World Emerging Markets equities. In addition, less volatile, unlisted funds were set up and real estate shares were reduced in the Real Estate World investment category. All reallocations were staggered and were largely completed by the end of the year. Composition of investments as of December 31, 2018 On the basis of the investment strategy and bandwidths approved by the Board of Trustees, complan invested% of its assets in interest-bearing investments such as government bonds and corporate bonds or loans to companies as of December 31 (see pie chart for the detailed breakdown). The value of these investments fluctuates less than that of the remaining 56% tangible assets. In this respect, interest-bearing investments are considered to be lower-risk. The investments in listed shares comprised around a quarter of the pension assets and those in real estate almost a fifth. One eighth was invested in private market investments and raw material investments. Stocks, real estate and commodity investments are considered riskier investments than interest-bearing investments. However, these are required so that complan can achieve the required target return to finance the promised pension benefits in the long term. Composition of assets as of, 9% Commodities 9.6% Private Markets 6.2% Real Estate World DM 2 13.1% Real Estate Switzerland 7.0% World Equities EM 3 11.2% World Equities DM 2 5.4% Swiss equities 6.1% Swiss corporate bonds 1 Swiss government bonds contain CHF 375 million in receivables from ZKB with an explicit state guarantee from the Canton of Zurich 2 DM: Developed Markets (developed countries, OECD) 3 EM: Emerging Markets (emerging countries, emerging countries ) 0.3% liquidity 5.3% Swiss government bonds 1 7.2% World government bonds DM 2 10.2% World corporate bonds DM 2 8.2% World EM government bonds 3 6.3% Private debt / loan As the liabilities of the pension fund In the case of investments in foreign currencies, a considerable part of the currency risks are systematically hedged. Investments in foreign currencies make up a total of 70.5%. After currency hedging, the proportion of unsecured foreign currency positions is still 15.9%. 7 plants
10 Overview of investment performance In the 2018 financial year, the investment return was -3.1%. Over the past five years, an average annual return of + 3.4% has been achieved (see graph for detailed performance figures). This exceeded the target return for this period. The portion of the return above the target return was used to finance the adjustments to the actuarial parameters (accounting interest rate and the latest life expectancy assumptions). In addition, the retirement assets of the active insured received slightly higher interest than the BVG minimum interest rate. The negative investment result in 2018 led to a significant reduction in the fluctuation reserve. The effective coverage ratio thus moved further away from the target coverage ratio for long-term securing of the promised pension benefits of 117.5%. Return on investment and interest in the last 5 years 9.0% 9.3% 7.0% 6.0% 5.1% 3.0% 2.00% 1.75% 1.25% 3.4% 1, 50% 1.00% 1.5% 0.0% 3.0% 0.6% 3.1% return on investment pa Interest on retirement capital pa Return on investment 5 years pa Interest on retirement capital 5 years pa 8 The investment categories with positive returns were private market investments, Real estate world, variable rate loans and Swiss government bonds. The strongest negative return contributions were made by the investment categories stocks and bonds in emerging markets (EM), stocks world DM and corporate bonds world DM. The negative return is mainly due to the valuation adjustment on the stock markets and the rise in US interest rates and credit spreads. In the relative benchmark comparison, there was a deviation of -0.2%. The main reason for the slightly negative deviation from the benchmark return in 2018 was the return on the part of active asset managers in emerging market investments. In the longer term, these active asset managers have been able to achieve a return advantage. Outlook for the 2019 financial year plants The economic outlook for the new financial year is divided into two parts.On the one hand, various economic factors such as GDP growth expectations or labor market data still show a solid picture in many regions and the financing conditions remain supportive. On the other hand, there are increasing signs of a cooling of the economic climate. The short-term positive effects of tax breaks are gradually fizzling out, protectionist measures such as tariffs have a negative impact on world trade and sluggish political negotiations increase the uncertainty in the financial markets. An unexpectedly strong slowdown in the international economy would quickly spread to Switzerland. Central banks' monetary policy will continue to play a key role in 2019. In the USA, the key rate hikes are likely to continue, in Europe, however, an initial rate hike is not expected before mid-2019. This would then also give the Swiss National Bank some room for maneuver. It can still be expected that interest rates in Swiss francs will remain low. In order to achieve positive returns, investment risks must be taken. Thanks to the broadly diversified investment strategy with appropriate return potential and careful management of the associated investment risks, complan is well equipped to cushion further corrections in the financial markets.
11 Balance sheet In thousands of CHF Notes Assets Cash and cash equivalents Receivables Investments with the employer (including shares) Government bonds Switzerland Government bonds World DM Shares World DM Shares World EM Real Estate Switzerland Private Markets Commodities EAF complan EAF complan II (PrDt) Active accruals and deferrals Total assets liabilities Vested benefits and Pensions Other liabilities Accruals and deferrals Employer contribution reserve Pension capital and technical provisions Pension capital, active insured pension capital, pensioners Technical provisions Value fluctuation reserve Foundation capital, free funds, underfunding 1 1 Total liabilities Balance sheet
12 Operating account In thousands of CHF Appendix Ordinary and other contributions and contributions Employee contributions Employer contributions Contributions from third parties Single premiums and purchase sums Single contribution Employer contribution reserve Entry benefits Vested benefits contributions Payment of WEF early withdrawals / divorce Deposits when insured persons are taken over Inflow from contributions and entry benefits Regular benefits ( ) () Old-age pensions () () Survivors' pensions (21,479) (19,992) Disability pensions (20,559) (20,357) Lump-sum benefits upon retirement (47,524) (50,701) Lump-sum benefits in the event of death and disability (2,721) (2,923) Withdrawal benefits () () Vested benefits upon departure () () Transfer of additional funds in the event of collective departure 10.1 (7 827) Advance withdrawals WEF / divorce (22 737) (21 172) Outflow for benefits and advance withdrawals () () 10 Operating account dissolution / formation Pension capital, technical provisions and contribution reserves (52 743) () Dissolution / formation of pension capital for active insured persons Dissolution / formation of pension capital for pensioners 5.7 (78 609) () Dissolution / formation of technical provisions Interest on savings capital 5.2 (44 112) (65 163) Dissolution / formation of premium reserves 7 (5 222) Insurance expenses (1 331) ( 1,366) Contributions to security fund (1,331) (1,366) Net outflow for pension capital, tech. Provisions and insurance expenses (54 074) () Net result from the insurance part () () Continued on next page
13 In thousands of CHF Notes on investments Income from cash and cash equivalents (208) (529) Income from investments with employers (including shares) (278) 952 Income from Swiss government bonds (1,879) Income from world government bonds DM (1,914) Income from world stocks DM () Earnings World EM equities (60 842) Earnings Swiss real estate (14 837) Earnings Private Markets Earnings Commodities (34 445) Earnings EAF complan () Earnings EAF complan II (PrDt) Interest income when taking over insured portfolios (pensioners) 17 0 interest on arrears Vested benefits (5) (4) Administrative expenses for investments 6.9 (72,791) (56 194) Net result from investments () Other income Other expenses 1 (40) Administrative expenses 8.9 (3,625) (3,633) General administration 8.8 (3,375) (3 313) Auditors and experts for occupational pension schemes (219) (290) Supervisory authority (32) (29) Excess expenses / income before dissolution / formation of fluctuation reserve () Dissolution / formation of fluctuation reserve () Income / expense surplus 11 Operating accounting tion
14 people and numbers active insured and retirees 103.1 percent coverage ratio
15 Appendix to the annual financial statements 1 Basis and organization 1.1 Legal form and purpose complan is a foundation under private law and a pension fund within the meaning of the Civil Code (ZGB) and the Federal Act on Occupational Retirement, Survivors' and Disability Pension Plans (BVG). The purpose anchored in the deed of foundation is to protect the employees of Swisscom AG and companies that are economically or financially affiliated with it, as well as their relatives and survivors, against the economic consequences of the risks of old age, death and disability. With the approval of the Board of Trustees, other companies can also join. Former insured persons can remain as voluntary members of complan for a maximum of two years under the specified regulatory provisions. 1.2 Registration BVG and security fund The foundation operates mandatory and extra-mandatory occupational pension schemes in accordance with the BVG for the employees of the affiliated companies and is entered in the cantonal register for occupational pension schemes of the Canton of Bern under the order number BE.0846. The pension fund pays the statutory contributions to the security fund in Bern. In the event of the insolvency of the pension fund, this guarantees the insured's benefits up to the maximum insurable salary of CHF in the security fund Investment regulations October 1, 2018 Partial liquidation regulations December 31, 2017 Integration regulations October 1, 2017 Election regulations July 1, 2017 Provision regulations December 31 Appendix to the annual financial statements
16 1.4 Management body with equal representation / authority to sign The Board of Trustees, with equal representation, consists of 14 members who are each elected for four years. The current electoral period for the Board of Trustees generally lasts from 2015 to Three employer representatives on the Board of Trustees were elected for the period from 2017 to 2020. Board of Trustees Employer representatives Name Employer Term of office Bracher Frédéric Swisscom (Suisse) SA Hösli Kathrin 1 Swisscom (Switzerland) AG Lamanna Merkt Lisa 2 Swisscom AG Rosati Stefania 3 Swisscom (Switzerland) AG Rossi Mario, Vice-President 1, 2, 4 Swisscom AG Schmid Louis 2 Swisscom AG von Fellenberg Michel 1, 5 Swisscom (Schweiz) AG Werner Hans Christian 1 Swisscom AG re-elected until joint signature of two 3 Resigned on February 5 Elected as Vice-President until December 31, 2018 and as President as of January 1, 2019 5 Entry As of February 6, 2018 Board of Trustees Employee representatives Name Employer Term of office Hofmann Dolkar 1 Swisscom (Switzerland) AG Hofstetter Thomas 2 Swisscom (Switzerland) AG Pardini Giorgio 1, 3 Syndicom Stornig Luciana 2 Swisscom (Switzerland) AG Sutter Hans-Peter 1, 4 Swisscom ( Switzerland) AG Walker Susanna Monika 1, 4 Swisscom (Switzerland) AG Wyler Alfred, President 1, 4, 5 syndicom union Appendix to the annual financial statements 1 re-elected until resignation on 31. December Elected as Vice-President from January 1, collective signature of two 5 Elected as President until December 31, 2018 Newly elected from January 1, 2019: Yannick Loigerot and Meret Meier without signing authority The Investment Committee consists of six members and is subordinate to the Board of Trustees in accordance with the organizational regulations and compiled as follows: Employer representative name employer Other position at complan Schmid Louis, President Swisscom AG Board of Trustees Schwab Daniel, Vice President Swisscom AG - Stermetz Eugen Swisscom AG - Employee representative name employer Other position at complan Kempf Peter Swisscom (Switzerland) AG - Sutter Hans -Peter Swisscom (Schweiz) AG Board of Trustees Walker Susanna Monika Swisscom (Switzerland) AG Board of Trustees, Ombudsman
17 Authorized signatories with an entry in the commercial register (HR) The following members of the management are authorized to sign in accordance with HR: Name Function Signing authority Denkinger Roman Head of Systems Collective for two Lehmann Daniel Head of IT & Organization Collective for two Conductors Urs Managing Director collective for two Schild Susanne Head of Accounting & Controlling Collective for two Valente Bittner Tiziana Head of Pension Provision Collective for two 1.5 Managing Director, Ombudsman, Expert, Auditor, Strategy Advisor, Controller, Supervisory Authority Function Managing Director Ombudsman Recognized Expert in Occupational Pensions Auditor Investment Strategy Advisor Investment Controller Frédéric Schaffner Name Schaffner Urs Bracher Frédéric Schaffner Prevanto AG, Zurich Wyss Stephan, lead expert Ernst & Young AG, Bern Schaller Patrik, lead auditor Ortec Finance AG, Pfäffikon Hamersma Raymond, Senior Consultant PPCmetrics AG, Zurich Riesen Lukas, Senior Controller Bernische BVG- und Stiftungsaufsicht (BBSA) Zimmermann Daniel, Head of Pension Funds 1.6 Affiliated employers Affiliated companies Change Billag AG (64) Cablex AG complan Voluntary membership 1 2 (1) Global IP Action AG net mobile Schweiz AG 2 3 (3) Swisscom AG Swisscom (Switzerland) AG (813) Swisscom Broadcast AG (13) Swisscom Directories AG (9) Swisscom Event & Media Solutions AG Swisscom Health AG (7) Swisscom Services AG Swisscom Ventures AG tiko Energy Solutions AG Turck Vilant Systems AG 5 6 (6) Worklink AG Total (638) 15 Appendix to the annual financial statements 1 The offense of partial liquidation in accordance with the partial liquidation regulations is presumably fulfilled. Partial liquidation will be carried out in future financial years. 2 left on December 31, 2018; Partial liquidation offense in accordance with the partial liquidation regulations not fulfilled. 3 Spin-off from Swisscom (Schweiz) AG by name change (previous year: Swisscom Energy Solutions AG). 5 Name change (previous year: Vilant Systems AG). Left on December 31, 2018; Partial liquidation offense in accordance with the partial liquidation regulations not fulfilled.
18 2 Active insured persons and pensioners 2.1 Active insured persons Number of active insured persons Change in active insured persons on January 1st (457) Entries (242) Exits (2,267) (2,209) (58) IV cases (22) (28) 6 retirements ( 335) (446) 111 deaths (16) (18) 2 Active insured persons on December 31 (638) 2.2 Pensioners Number of pensions and pensioners Change in old-age pensions Disability pensions (13) Spouse / partner pensions Divorce pensions Child pensions (5) Total pensions Double counting (26) 1 (30) 2 4 Total pensioners AHV bridging pensions (44) IV bridging pensions (2) 1 24 Double counting: recipients of old-age and disability pensions; 2 Double counting: recipients of spouse / partner and old-age pensions 2 28 Double counting: recipients of old-age and disability pensions; 2 Double counting: recipients of spouse's / partner's and retirement pensions 16 3 Pension plan and its financing Appendix to the annual financial statements 3.1 Explanation of the pension plan As a comprehensive pension scheme, complan undertakes to provide at least the statutory pension benefits and at the same time enables benefits that are significantly higher than the BVG -Minimum go beyond. The insured salary comprises the entire annual salary subject to AHV (without coordination deduction) and amounts to at least CHF. The retirement benefits are defined in the defined contribution plan and the disability and survivors' benefits in the defined benefit plan (dual plan). The individual pension capital of the active insured is accumulated through employee and employer contributions and earns interest on an annual basis. At the time of retirement, the insured person has the choice of drawing their pension capital as a lifelong retirement pension combined with a spouse's pension of 60.00% or as a partial or full lump-sum withdrawal. The amount of the pension benefits will be calculated in December 2018 using a conversion rate at age 65 of 5.76% (previous year: 6.00%). In July 2017, the conversion rate was reduced from 6.11% to 6.10% at the age of 65 and subsequently by a further 0.02% to 5.34% every month in September Annuity payment set.
19 3.2 Financing, financing method The foundation provides the active insured with three retirement savings options (standard, plus and extra plan). The employee savings contributions amount to between 6.6% and 19.0% of the insured salary, depending on the age of the active insured and the selected pension plan. The employer's savings contributions are identical for all three savings options and vary between 6.4% and 13.0% depending on the age of the active insured. Voluntary purchases of lost contribution years are possible at any time on the basis of the regulatory purchase table. In addition, the employer pays risk contributions in the amount of 2.45% of the insured salary and a conversion loss contribution in the amount of 1.2%. The savings contributions of the three savings options correspond to the following percentages of the insured salary: Employer Employee Employee Employee savings contributions Savings contributions Savings contributions Age savings contributions for all three plans Standard plan Plus plan Extra plan, 0% 4.0%, 4% 6.6% 8.1% 9.0 %, 4% 8.6% 10.1% 14.0%, 0% 10.6% 12.1% 19.0% 4 Valuation and accounting principles, consistency 4.1 Confirmation of accounting according to Swiss GAAP FER 26 The accounting, Accounting and valuation are carried out in accordance with the provisions of the Swiss Code of Obligations (OR) and the Federal Act on Occupational Retirement, Survivors' and Disability Pension Plans (BVG). The annual financial statements, consisting of the balance sheet, operating account and appendix, convey the actual financial situation within the meaning of the BVG and comply with the provisions of Swiss GAAP FER accounting and valuation principles The following valuation principles were applied as of December 31, 2018: 17 securities The valuation of securities (shares Government and corporate bonds, derivatives, index certificates, so-called structured products and collective investments) are made at market values on the balance sheet date. The rates as determined by the central custodian are decisive. Foreign currencies Assets and liabilities in foreign currencies are valued at market value on the balance sheet date. The rates as determined by the central custodian are decisive. Supplementary Annexes Private Markets and Private Debt (PrDt) The valuation is carried out according to accounting standards customary in the branch such as IFRS or US GAAP. Due to the time lag in the revised financial statements, the valuation is carried out on the balance sheet date with a preliminary statement of investment, which is checked by the selected auditing companies. The number and evaluation of the underlying items are systematically checked by the complan office over the course of the financial year. Appendix to the annual financial statements Commodities Valuation is based on market values (traded prices of financial contracts or gold price) on the balance sheet date. Single investor funds: EAF complan and EAF complan II (PrDt) The securities accounting is carried out according to the legal fund structure. In the balance sheet and income statement, the assets are shown at EAF complan or EAF complan II (PrDt) level. Since the investment strategy is managed according to asset categories, the investments are presented in the notes to the annual financial statements at asset category level.
20 Pension capital and technical provisions Pension capital and technical provisions are determined annually by recognized experts in occupational pensions according to recognized principles and on generally accessible technical principles. The calculation of the technical provisions is based on the provision regulations of December 31st. Value fluctuation reserve The value fluctuation reserve is created for the market-specific risks underlying the investments in order to support the sustainable fulfillment of the performance promises. The target set by the Board of Trustees based on financial and economic considerations and the current situation is 17.5% of the obligations (pension capital). In the financial and economic process, the return and risk characteristics of the investment strategy are used to determine the fluctuation reserve, which enables a coverage ratio of 100.0% over a year with sufficient certainty (security level of 97.5%). The fluctuation reserve is recalculated annually and / or when the investment strategy changes. Other assets and liabilities The other assets and liabilities are reported at their nominal values. 5 Underwriting information 5.1 Type of risk coverage, reinsurance complan is completely autonomous. It bears the actuarial risks of old age, death and disability itself. There are no reinsurance contracts. 5.2 Interest on pension capital and inflation adjustments on pension benefits 18 In 2018, the pension capital of the active insured earned interest at the rate of 1.00% set by the Board of Trustees (previous year: 1.50%). In addition, the Board of Trustees decided not to grant any pension increases or additional pension payments due to the current financial situation and the low interest rates to be expected in the future. The financial situation will be checked again in 2019. Appendix to the annual financial statements 5.3 Development and interest on savings balances In CHF thousands Balance of savings balances on 1.January Savings contributions, employees Savings contributions, employers Special contributions Additional contributions and contributions Deposits and purchase sums of vested benefits Deposits from free funds (transfer of insured persons) Payment of WEF advance withdrawals / divorce Vested benefits upon leaving () () Advance withdrawals WEF / divorce (22 321) (21 172) Lump-sum benefits on retirement (47 524) (50 701) Lump-sum benefits in the event of death and disability (2 721) (2 923) Dissolution / formation as a result of retirement, death, disability, pre-financing account () () Interest on savings capital and the pre-financing account Change in inventory of pre-financing account (475) Change in minimum amount according to Art. 17 FZG (382) Balance of savings on December 31st
21 5.4 Technical principles In CHF thousands Technical basis BVG 2015 (generation table) BVG 2015 (generation table) Technical interest rate 2.00% 2.00% 5.5 Total of BVG retirement assets In CHF thousands BVG retirement assets (shadow calculation) BVG minimum interest rate 1 .00% 1.00% The BVG minimum retirement savings (excluding the minimum retirement savings for the disability pensioners) used in the shadow calculation are 34.9% (previous year: 35.4%) of the pension capital of the active insured and is an expression of the fact that extra-mandatory pension provision is an essential Part of complan. 5.6 Pension capital for active insured persons In thousands of CHF Pension capital Additional savings accounts Pre-financing account Minimum amount in accordance with Art. 17 FZG Pension capital for pensioners In thousands of CHF Retirement pensions AHV bridging pensions Disability pensions IV bridging pensions Additional savings accounts IV pensioners Spouse / partner pensions Divorce pensions for employers and employers Children's pensions without employers' pensions they are pensioners who cannot be assigned to any affiliated employer. 19 Notes to the annual financial statements 5.8 Composition of technical provisions In CHF thousand Change in the status of technical provisions on January 1 (48 089) Dissolution / formation (50 818) (48 089) (2,729) Status of technical provisions on December 31 (50 818 ) a. Fluctuations in death and disability costs (445) b. Advantageous conversion rates c. Special deposits July 1 (74 275) d. Pending and latent disability cases (50 818)
22 a. Provision for fluctuations in death and disability costs: The actuarial risks of death and disability are borne independently by complan. Accordingly, a provision must be made in order to be able to compensate for deviations from the statistical mean values. This provision should be endowed in such a way that the financial damage can be covered in 97.5% of the expected cases by the provision made minus the regulatory risk contributions. b. Provision for advantageous conversion rates: The regulatory conversion rates, taking into account the gradual reduction from July 1, 2017 to September 1, 2020, are higher than the actuarially correct rates. With every ordinary and early retirement, complan makes a conversion loss. Part of this loss is covered by the employer's conversion loss contribution of 1.2% of the total insured wages. The provision is calculated for all active insured persons aged 55 and over, assuming a 100% pension. The employer's conversion loss contribution is credited in terms of present value. c. Provision for special contributions July 1, 2017: To cushion the reduction in the conversion rate from July 1, 2017, an individual special contribution was determined as of July 1, 2017 for those insured who were active and disabled on March 31, 2017 and who were born in 1969 and older. This individual special contribution is converted into fixed monthly amounts and credited to the retirement account for 60 months. d. Provision for pending and latent disability cases: The provision for pending and latent disability cases is set up to ensure the financial consequences of disability cases that are currently being investigated. The amount of the provision corresponds to the pension capital of the presumed disability benefits of 262 (previous year: 232) registered insured persons unable to work and 10 (previous year: 19) former insured persons who have already left. In the case of insured persons unable to work with a duration of incapacity for work of up to 180 days, 0% of the loss amount is deferred, between 180 and 360 days 50% and from 360 days 100% of the loss amount. For those insured who have already left the company, 50% of the loss amount is set aside. 5.9 Coverage ratio according to Art. 44 BVV 2 20 In CHF thousands Total assets (balance sheet total) Liabilities (45 258) (53 473) Deferred income (650) (552) Employer contribution reserve (10 573) (5 351) Net plan assets (Vv ) Appendix to the annual financial statements Pension capital, active insured pension capital, pensioners Technical provisions Pension capital (Vk) Surplus / deficit Funding ratio Art. 44 BVV 2 (Vv / Vk) 103.1% 107.7% The pension capital and technical provisions are recalculated annually. The coverage ratio decreased from 107.7% in the previous year to 103.1% as of December 31, in particular due to the return on investment. Result of the actuarial report The actuarial report was prepared by Prevanto AG on 31 December 2018 with the following conclusions:> The pension obligations were due to of the technical basis BVG 2015 (generation tables) with a technical interest rate of 2.0% (previous year: analogous technical basis). > All technical provisions have been accumulated to their target value in accordance with the provisions regulations valid from December 31, 2017. Thus, complan fulfills the legal requirements regarding security measures. > According to Art. 52 e BVG, complan is able to cover its technical obligations. The coverage ratio according to Art. 44 BVV 2 is 103.1% (previous year: 107.7%).
23> complan has a fluctuation reserve of CHF million (17.5% of the target value) and has limited financial risk capacity (previous year: CHF million and 43.0% of the target value). > The financing of complan is technically correct. In addition, the regulatory actuarial provisions correspond to the currently known statutory provisions. 6 Explanation of the investment and the net investment result 6.1 Organization of investment activities The Board of Trustees, as the highest body, is responsible for managing the assets. It defines the principles and objectives of the investments and approves the long-term investment strategy and the investment regulations. It appoints the members and the chairman of the investment committee and determines the central custodian. On the recommendation of the office, the investment commission selects the asset managers of the individual investment categories. Mandate contracts with detailed investment agreements are concluded with all asset managers. Central custodian, fund management and asset management mandates (as of December 31, 2018) Central custodian UBS Switzerland AG Fund management UBS Fund Management (Switzerland) AG Licensing / supervision Federal financial market supervision, FINMA licensing / supervision Federal financial market supervision, FINMA asset manager licensing / supervision Investment category Aberdeen Standard Investments Financial Conduct Authority, FCA (UK) Government Bonds Welt EM Acadian Asset Management LLC US Securities and Exchange Commission, Aktien Welt EM SEC (US) Bain Capital LLC US Securities and Exchange Commission, Private Debt / Loans SEC (US) Blackrock Asset Management Schweiz AG Swiss Financial Market Authority, FINMA Private Markets CBRE Global Investment Partners Limited Financial Conduct Authority, FCA (UK) Immobilien Welt DM Credit Suisse AG Federal Financial Market Authority, FINMA Corporate Bonds Switzerland, Government Bonds World DM, Shares World EM Goldman Sachs International Financial Conduct Authority, FCA ( UK) commodities Guggenheim Partners Investment US Securities and Exchange Commission, Private Debt / Loan Management LLC SEC (US) Macquarie Infrastructure and Financial Conduct Authority, FCA (UK) Private Markets Real Assets (Europe) Limited Mesirow Financial US Securities and Exchange Commission, Foreign Currency Hedging Investment Management Inc . SEC (US) Pacific Investment US Securities and Exchange Commission, Corporate Bonds Welt DM Management Company LLC SEC (US) Partners Group AG Swiss Financial Market Supervisory Authority, FINMA Private Markets, Private Debt / Loans PGIM Inc. US Securities and Exchange Commission, Government Bonds Welt EM SEC (US) Robeco Institutional Asset Management BV Autoriteit Financiële Markten, AFM (NL) Aktien Welt EM Schroder Adveq Management AG Federal Financial Market Authority, FINMA Private Markets State Street Global Advisors Limited Financial Conduct Authority, FCA (UK) Immobilien Welt DM Swiss Rock Asset Management AG Federal Financial Market Authority, FINMA Aktien Schweiz UBS AG Swiss Financial Market Authority, FINMA Swiss Shares, World Shares DM, Swiss Real Estate Zürcher Kantonalbank Swiss Financial Market Authority, FINMA Swiss Government Bonds 21 Appendix to the annual financial statements
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