SWITZERLAND - Abolishing the mandatory section of the Swiss second pillar pension provision would worsen rather than ease the financial crisis in the first pillar, according to Hanspeter Konrad, president of the federation of Swiss Pensionskassen ASIP.
Konrad's comments were made in reaction to suggestions by the outgoing head of the first pillar fund AHV, Ulrich Grete, after Grete urged politicians to limit mandatory pension provision to the first pillar by making supplementary pension arrangements voluntary only.
Instead of having to offer second pillar pensions, Grete wants to see employers paying more into the AHV pay-as-you-go fund.
In his final speech before retiring as head of the supervisory board of the fund, he suggested strict regulations for the mandatory second-pillar provision are weakening the system and making it unsustainable.
"Suggesting we expand the first pillar is no purposeful contribution to current discussions," Konrad argued. "In fact, it is endangering the current system."
He noted weakening funded pension arrangements is against the trend seen in other European countries and described the Swiss model as a "success story".
However, Konrad agreed with Grete changes to the syste,m especially regarding strict regulations, were necessary.
Grete had also mentioned the problem of too high conversion rates used for calculating pension benefits in the pay-out phase.
ASIP last year suggested cutting the conversion rate several times and its demands were supported by the OECD. (See earlier IPE coverage: Let funds decide on conversion rate - OECD)
Konrad said he would like to see a simplification of regulations for the mandatory second-pillar provision which has more autonomy for the Pensionskassen but without abandoning the concept of a mandatory second pillar.
Grete's successor at the AHV, Marco Netzer, told IPE he could not yet comment on the issue as he had just taken on the position last week.
The Swiss government named Netzer, partner at private bank Banque Cramer in Geneva, at the end of November as successor to Grete on the AHV's supervisory board until 2011.
Grete, former head of the Schweizer Bankgesellschaft SBG which later merged with the Schweizer Bankverein to form the UBS bank, announced his retirement last autumn after seven years in his position.
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