Swiss council in proposal to stabilise pensions
SWITZERLAND – The Swiss federal council has sent its proposals on the stability of the occupational pensions sector to Parliament.
In its letter to Parliament, the Swiss federal council has highlighted the problem of underfunding facing company pension schemes and has made five proposals on how this pressure can be eased.
“Almost half of the company pension schemes are currently underfunded as a result of insufficient returns resulting from market losses,” the proposal says. As a result, the council is making the case for more flexibility for the schemes.
It is proposed that funds are asked for increased contributions from both the employers and the employees in periods of underfunding. It is also proposed that the schemes should be able to reduce the minimum interest rate guarantee at such times.
The underlying message of the council is that “company pension schemes should be able to temporarily be underfunded as long as they guarantee that performance has dropped within the legal requirements and if they take measures to restore the funding levels”.
The proposals apply only to autonomous company pension schemes, as insurance companies and their foundations are governed by insurance law.
ASIP, the Swiss association for occupational pensions said that it felt the proposals were “positive”.