SWITZERLAND - The Swiss Pensionskassen association ASIP has again urged members to ensure transparency of fees and other payments after a Swiss court ruled in favour of a Pensionskasse on the subject of retrocessions.
The Pensionskasse, which has been reported to be the pension scheme for the Swiss branch of Siemens, had argued that commission fees amounting to CHF3.6m (€2.9m) which an asset manager had been paid by a custodian should legally have been forwarded to the Pensionskasse.
Retrocessions can be any commission fees or other payments for services rendered paid by a third party to an asset manager managing money on behalf of a Pensionskasse.
The law guiding Swiss Pensionskassen forbids asset managers to keep such commissions for themselves, as it could lead to conflicts of interest or deals not in the interest of the pension fund.
While the Pensionskasse suing for payback of retrocessions had waived its right to have the payments passed on, it later argued that such a waiver is only legal if it had known the full extent of the payments in advance.
A Swiss court has now ruled that in the case in question, the payments must to be forwarded to the Pensionskasse.
The court added that a full waiver for forwarding retrocessions was not in line with the objective of the legal requirement to pass on such payments, namely to avoid conflicts of interest.
In a letter to its members, ASIP cited choice of products and reshuffling of portfolios as activities that should be done "only for the benefit of the Pensionskasse and without any financial incentive for the asset manager".
ASIP's managing director Hanspeter Konrad told IPE he "welcomed this verdict which confirms our position and certainly strengthens
Pensionskassen in enforcing their claims" vis-á-vis asset managers.
His association has frequently called on its members to "actively approach" asset managers and other service providers on the subject.
He added that new under new regulations - introduced as part of the structural reform of Pensionskassen underway in the country - written contracts are required for all payments made to the asset manager, even to third parties.
Swiss asset management company Swisscanto also welcomed the increased transparency and said it did not view it as problematic if more Pensionskassen were to follow ASIP's call to actively approach asset managers.
"In our view an investor has the right to know what services from third-parties cost," Swisscanto said in a statement to IPE.