Sections

New Swiss pension scandal emerges

SWITZERLAND - The Swiss pension industry - already reeling from the Swissfirst insider trading allegations - has been dealt another blow.

It's emerged that the pensions regulator has ordered the liquidation of a pension fund which seems to have lost almost all of its assets in a development which has nothing to do with the Swissfirst affair.

The Swiss Federal Social Insurance Office (BSV) filed charges against two of the eight board members of the First Swiss Pension fund on August 17 after it appeared that around CHF33m (€19.52m) had vanished.

The fund, which was launched in 2003, indicated at the end of last year that it had provisional assets of CFH38m.

Isabelle Amschwand-Pilloud of the BSV said: "The foundation's board was responsible for the proper and correct investment of the money. This has most probably not happened, as we did not receive any confirmation from any financial institution that these assets are actually there."

The BSV had been chasing the fund for several months and had faced delaying tactics, said Amschwand-Pilloud. The fund initially put off suspicions by claiming that there was a delay due to sickness and someone having deceased.

When at the end of 2005 there was still no proof of the fund's assets despite repeated requests, the BSV suspended the fund's eight board members on August 2 and replaced them with two interim executives.

They found that the total number of assets that were still left at the end of last month were approximately CHF4.5m (€2.67m).

"Where the missing assets of around CHF33m are is at the moment unclear," the regulator said in a statement today.

It added that "the chance that the collective foundation will have enough assets in time to continue with the fund is extraordinarily small".

The BSV believes the fund is no longer able to perform its duties under the law.  "Hence the BSV has liquidated the foundation by decree from September 1, 2006 and dismissed the suspended foundation board."

It is certain that 726 of the 744 insured will not suffer any losses under the cover of the Security Fund Occupational Care (BVG), which secures the requirements of the members up to CHF116,000.

The remaining 18 members together have suffered a combined loss of approximately CFH170,000. "As soon as we find some of the lost money, also they will be reimbursed," said Amschwand-Pilloud.

The BSV decided to file charges only against two members of the board as these were the members who seemed to be running the scheme. The other members only joined relatively recently after Swiss legislation obliged pension funds to have representatives of pensioners as well.

The regulator cannot mention any party involved as only private plaintiffs are informed of further details.

Amschwand-Pilloud expects that technically speaking this case will be resolved from January 1 next year. "How long the legal action will take is uncertain, it can take up to several years," she added.

The affair follows the Swissfirst scandal, in which several pension funds have become embroiled in an alleged share-trading scam.

Have your say

You must sign in to make a comment

IPE QUEST

Your first step in manager selection...

IPE Quest is a manager search facility that connects institutional investors and asset managers.

  • QN-2467

    Asset class: Search for a broker (mainly ETFs).
    Asset region: Global.
    Size: 250m.
    Closing date: 2018-08-28.

  • DS-2468

    Closing date: 2018-08-24.

Begin Your Search Here