WTW Swiss Pension Finance Watch – Q3/2025
ZURICH / LAUSANNE / GENEVA, October 14, 2025 — After a small dip in Q2 2025, company balance sheets linked to Swiss pension obligations stabilized in the third quarter of 2025. According to the WTW Pension Index, the illustrative coverage edged up by 0.2 percentage points to 124.4%. Both pension assets and liabilities increased modestly, by 2.5% and 2.3% respectively. Market conditions improved as volatility eased, supported by a recovery in global equity markets and stable bond yields. Experts recommend maintaining a well-diversified investment approach, managing risks carefully, and, depending on the home currency, reviewing exposure to USD.
Pension fund assets delivered a strong performance, rising by 2.5% in Q3 2025, while liabilities increased by 2.3% following a reduction in the discount rate. As a result, the illustrative funded ratio — the ratio of pension assets to liabilities — remained largely unchanged, edging up by 0.2% during the quarter, according to WTW’s Pension Index, which moved from 124.2% as of 30 June 2025 to 124.4% as of 30 September 2025.
While financial markets remained sensitive to global developments — including ongoing geopolitical tensions and uncertainty over monetary policy — the third quarter saw reduced volatility compared with earlier in the year. Pension fund returns were positive, supported by a rebound in foreign equity markets and stable fixed-income performance.
The discount rate declined slightly during Q3, reflecting small reductions in Swiss and European bond yields. This relative stability resulted in only limited valuation effects on company pension balance sheets under IAS 19 and US GAAP accounting standards.
“A rebound in global equity markets supported positive investment returns for Swiss pension funds in Q3 despite Swiss equities being flat. Company pension fund liabilities increased due to reducing corporate bond yields (lower discount rates) driven by a flight to safety due to global uncertainty and the Swiss national bank’s dovish stance,” comments Adam Casey, Head of Corporate Retirement Consulting at WTW in Zurich. He adds, “Company Swiss pension balance sheets were therefore on average flat over the quarter with pension funds generally remaining in strong financial positions.”
During Q3, the Swiss National Bank maintained its policy rate at 0%, while the U.S. Federal Reserve cut policy rates by 0.25 percentage points in September. Persistent geopolitical tensions made it clear to institutional investors that they can no longer afford to ignore the impact of conflict and geopolitics on portfolio strategy. Not only do shifts in geopolitics threaten many of the economic heuristics investors rely on (e.g. the role of the U.S. dollar), they are also manifesting in ways that directly impact the business models of the multinationals which dominate the portfolios of many investors.
“As geopolitical shifts are outsized, they are likely to be an important driver of capital flows over the coming years which is why they are also investment relevant,” notes Alexandra Tischendorf, Head of Investment at WTW Switzerland. “The new normal world of uncertainty matters because many investment strategies rely – implicitly or explicitly – on assumptions about U.S. stability, such as it was the case on the low correlation between equities and bonds.” In response to a more volatile and geopolitically complex environment, investors are advised to diversify broadly, seek alpha through active management, reassess U.S. exposure—particularly currency risk—while consider sources of downside protection strategies.
Swiss Pension Finance Watch reviews quarterly how capital market performance affects pension plan financing in Switzerland. The study is part of the Global Pension Finance Watch from WTW which includes results back to 2000 for major retirement markets worldwide. The results are published quarterly with a focus on linked asset/liability results. It covers pension plans in Brazil, Canada, the Euro-zone, Japan, Switzerland, the U.K., and the U.S.
The impact of capital markets on these pension plans is two-fold:
WTW’s model defines a benchmark pension plan that is intended to be representative of the pension liabilities and plan assets (including asset mix) that are typically found in each global market. The impact of movements in capital markets on assets and liabilities is combined to produce a Pension Index which reflects the movement in the funding level of the benchmark pension plan.
