Groupe Mutuel Prévoyance-GMP

Activity Report 2022

Editorial

2022: the second pillar in the midst of the crisis

While the previous year had offered excellent prospects for returns for the second pillar, 2022 served as a reminder of the fundamentals of this business activity: a long-term view and the building up of appropriate reserves in prosperous times with a view to absorbing fluctuations in market values. The war in Ukraine and its strong impact, the return of inflation and the sudden rise in interest rates, although expected, was a sharp turnaround that only pension funds with a sound management policy were able to cope with.

Thanks to its long-term vision, Groupe Mutuel Prévoyance-GMP was able to absorb the year’s performance of -9.35% while maintaining a coverage ratio of 105.25% as at 31 December 2022. This means that commitments remain fully covered.

Furthermore, insured persons received an additional interest of 3% in 2022, which brings the total interest to 4%, including the statutory LPP/BVG rate of 1%. For 2023, an allocation of 0.5% of the available provision guarantees that insured persons will receive an interest rate of 1.5% from the beginning of the financial year. This approach places Groupe Mutuel Prévoyance-GMP among the collective pension funds that have distributed the highest interest rates over the last 10 years, with an average of 2.8%.

The pension fund’s investment policy has taken into account respect for the environment, societal impact and corporate governance for several years now. The implementation of our ESG charter is well underway. The various assessments of our investment activities confirm that the approach we have chosen is successful and that it is continuously being improved.

Administration of the pension fund

A significant breakthrough in German-speaking Switzerland that is still going strong

After the record year of 2021, the success of our commercial activities was confirmed once again. The offers presented to companies met the expectations of SMEs in all linguistic regions, with 342 new contracts signed, which represents an annual premium volume of CHF 10.2 million. It is pleasing to note that 30% of the growth in turnover was achieved in the German-speaking part of Switzerland, thereby strengthening the national presence of Groupe Mutuel Prévoyance-GMP.

We are constantly developing the potential of technology to simplify the work of our various account managers. A major review was conducted and the decision was made to invest in a new, highly customer-oriented IT application. Digitalisation is part of our strategic vision and will continue with this project.

Capital investment activities

Review of the past year
2022 was marked by several major events. While inflation began to rise at the end of 2021, the onset of the war in Ukraine pushed it to levels that had not been seen for decades. The surge in energy prices, the difficulty in obtaining raw materials - as a result of the temporary closure of China - and the sudden reversal of the accommodating policies of central banks weighed on financial markets. Later in the year, wage pressures linked to falling purchasing power began to weigh on corporate profit margins. At the end of the year, fears of a power shortage and the risks of a recession in Europe put further pressure on the markets. All of these factors created an unprecedented situation: the different types of assets in the portfolio suffered significant falls.

Performance of investments
The management of different types of assets in 2022 provided a return on equity of -9.4% net of fees. By way of comparison, the benchmark index was -10.2%. This overperformance is mainly due to Swiss equities and Swiss franc bonds. This result should also be compared with Pictet's LPP25 and LPP40 indices, which posted losses of -14.1% and -14.8% respectively.

Inflation should have peaked by the end of 2022, and apart from external factors, the markets should perform better in 2023.

Sustainable and responsible investments

Groupe Mutuel Prévoyance-GMP’s ESG policy was implemented in 2021. The year under review saw a continuation and reinforcement in the measures relating to the positioning of assets through an ESG lens. The annual audit by Conser SA, an independent expert, confirmed the positive trend in the investment methodology, with an improvement in the overall rating: GMP was awarded A for its overall portfolio, compared to A- in 2021 (the rating scale ranging from A+ to D, with the benchmark remaining at B+). All asset categories in the portfolio contribute to the improvement of this assessment.

The independent association "Alliance Climatique Suisse", which is made up of more than 100 Swiss organisations from all sectors of society and which screens around 160 pension funds in relation to their environmental policy, has confirmed the good practices of GMP in terms of responsible investment. GMP has moved into the "Good Practice" category, with a rating of "Significantly Better", making it one of the 30% best rated pension funds.

Among the projects that are taking shape and that will bring real added value to the monitoring of the ESG criteria of the GMP portfolio, the management of the real estate portfolio was integrated into the ESG charter in 2022. The Signa-Terre foundation is currently implementing its action plan, which will integrate and monitor data related to the "direct real estate" asset category.

Key figures

2022

Balance sheet total 2022 (in CHF thousand)

Number of employers affiliated to GMP as at 31.12.2022

Number of persons who contributed during the 2022 financial year

0,35%

Investment performance in 2022

0,25%

Coverage ratio for GMP in 2022

0,5%

Remuneration interest for 2023 (3% more than the statutory minimum rate)