The supervisory authority of the Swiss canton of Zurich (BVS) is lobbying for binding standards in the risk assessment of pension funds, according to BVS director Roger Tischhauser.
Tischhauser told delegates at the bi-annual pension fund conference Fachmesse 2. Säule in Zurich that the new supervisory bodies in Switzerland needed such guidelines to properly assess Pensionskassen – and punish them if necessary.
“We cannot demand certain standards if they are only recommendations,” he told IPE.
However, he added that any further demands on pension funds should not create additional costs in the second pillar.
“It is the OAK’s responsibility to harmonise the supervisory parameters in Switzerland,” he said.
In its annual report for 2013, Switzerland’s top supervisory authority, the OAK, actually included the “re-calibration of risk parameters” as one of its goal for 2014.
Tischhauser said it was “too early” to make any predictions on which parameters would be included but confirmed that a working group consisting of representatives from the OAK, the social ministry BVS, the association of pension fund experts SKPE, the chamber of custodians THK and the Swiss pension fund authority ASIP was discussing the issue.
Tischhauser became head of the newly created supervisory authority in Zurich a year ago, when it was set up as an independent body as required under the new law created by the Strukturreform.
Since then, he has introduced a ‘risk-tool’ that includes various parameters by which to assess the financial situation of a Pensionskasse.
“We have been pioneers in this field – not least because we have a large market share,” he said, adding that benchmarks such as the funding level were “important but not enough”.
In total, the BVS is supervising 45% of all Swiss pension funds, which are managing around 35% of the total volume in the second pillar.
He also hired pension fund experts for his supervisory authority to “increase the know-how” on risk assessment in Pensionskassen.
Tischhauser stressed that pension funds should “not underestimate” reputational risk, as reports on financial problems in the second pillar “might lead to further regulation”.
“And we already have enough of that,” he said.
On the financial situation of Swiss pension funds, he pointed out that not all schemes had done enought to build their buffers, but he said some had made the most of good returns in recent years.
Similarly, he said the technical parameters for calculating liabilities at Pensionskassen had improved, “but we are not yet where we should be”.
“With the structural reform, the supervisory authorities have been given a mandate for quality control at Pensionskassen, and we are looking into how pension funds experts have advised funds and whether their recommendations were followed,” he said.
For Tischhauser, a next step would be “to set down binding standards” on how to react if pension funds fall short of certain risk parameters.