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New industry group predicts 'massive consolidation' in Swiss pensions

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More than half of Swiss pension funds will “disappear” in the coming decade, according to a newly formed group of industry experts seeking to lend a voice to the French-speaking part of Switzerland in the debate over the future of second-pillar system.

The Group de Refléxion is made up of union representative Aldo Ferrari, who is also a member of the top supervisor OAK, consultant Bernard Perritaz, actuary Stéphane Riesen, lawyer and professor Jacques-André Schneider and actuary Fabrice Welsch.

In its first statement, it predicts “massive consolidation” in the second pillar and argues that this will ultimately be in pension fund members’ interest.

“Over the next 10 years, half of all Swiss Pensionskassen will disappear,” it says.

The group also argues that there should be only one type of Pensionskasse, and that the wholly insurance-based model should “vanish”, as it is “doomed to fail eventually”.

In the wake of the cost debate in the second pillar and the low-interest rate environment, insurers have faced scrutiny over allegedly non-transparent cash-flows and cost structures.

The Group de Refléxion also spoke out against the “individualisation” of the second pillar, claiming that increasing individual choice for pension fund members contradicted the solidarity principle.

Meanwhile, the Swiss government sparked a heated debate in the industry with a proposal to forbid lump-sum payments from a Pensionskasse on retirement.

Based on claims that some people were exhausting their retirement funds too quickly and then drawing on emergency funds, the government wants money saved in the mandatory system to be paid out in monthly payments only.

But the Swiss pension fund association ASIP warned against changing the system without reliable statistics or information on whether lump-sum payouts were really being misused to a considerable extent.

Elsewhere, the government changed the funding of the top supervisory body Oberaufsichtskommission (OAK), as the authority reported a major surplus in funding in its second year of existence.

In 2012, after its first year of operation, the OAK reported a CHF1.6m (€1.3m) surplus and in 2013 a surplus of CHF2m.

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