Jean-Pierre Steiner of the Nestlé Pension Fund in Vevey welcomed the scrutiny applied to the scheme as a result of the submission for the IPE Awards in Fund Structure and Administration.
“It is always interesting to hear the views of those outside our fund as it provides an interesting external benchmark, and in this case one with a European flavour,” he said.
Asked about the distinctive features of the fund, he referred to the dual defined benefit (DB) and defined contribution (DC) aspect.
“We believe that this offers the best of both worlds, but perhaps more importantly, fits much better with Swiss law, enabling both employer and employee to benefit, providing security for the latter.
“It is worth mentioning that under Swiss accounting practice there is a cap on the employers’ liability, with the fund bearing the remainder of the investment risk. Hence getting the structure right is fundamental to the success of any scheme.”
A company such as Nestlé often has to concern itself with the portability of its plan, and Steiner explains a common misconception: “People often think the DC aspect of our plan is there because of the easier portability, but it is perfectly possible to design a DB plan to operate in the same way.
“However, we do have an ex-pat plan which contains this same dual feature, but also involves a Swiss Franc currency guarantee for beneficiaries, allowing payouts in that currency after rights accruing overseas.”
He also points out that the structure of the scheme is important, given the fact that the investment strategy is different to many other European funds. “We have a strong weighting towards alternative investments, such as hedge funds and private equity. This is currently around 10% of total assets, and may well climb higher, probably at the expense of Swiss equities, currently around 4% of a 50% fund equity holding, as the domestic arena expands over the Euro-zone.
“As pioneers in this area we have also had to develop an administration capable of dealing with this.”
The question of communication with fund members is also high on Steiner’s list of plusses that the fund can boast. “We are constantly upgrading the information we put on the intranet, in three different languages. Among other things, employees can calculate their own pension’s future development. We consider the company pension to be the most beneficial and most expensive fringe benefit which we provide, and so communication is a key part of our administration.”

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