The Swiss central bank has little scope to help pension funds hurt by low returns, Chairman Thomas Jordan said on Tuesday.
He acknowledged the difficulties but told an audience at the University of Lucerne:
"A large part of the challenges faced by pensions ... is to do with regulations, the real economy and demographics and so is of a structural nature.
The Swiss National Bank has charged a negative interest rate of -0.75 percent on deposits it holds for commercial banks beyond a certain threshold since January 2015. The policy is designed to relieve upward pressure on the Swiss franc by making investments in the currency less attractive.
Swiss pensions are now under stress as the Central Bank undermines their returns with a negative interest rate policy. The statement that they have limited ability to help the funds is blatantly false, as funds are spiraling down in value as the SNB policy to keep the Franc down hits Swiss bonds and
We are not yet at the point where stocks (a privately held asset) and gold, the oldest form of money scream to new highs. First a point of recognition must occur in the minds of the public and fund managers that government bonds are garbage and will only provide negative rates of return both in asset value and yield.
In the United States, bonds are still yielding above zero rates. We anticipate that the US bond market will effectively be the last man standing before it too succumbs to negative yields in due time.