Credit Suisse Pensionskasse, the pension fund for the bank’s employees, will change its plans to match those of the pension fund of UBS – another step in the direction of merging the two schemes.
The Swiss defined benefit (DB) pension plan for Credit Suisse employees will adopt the same rules as the UBS pension fund from 1 January 2027, UBS said today in its Q4 2023 financial statement.
The board of trustees of the Credit Suisse scheme took the decision to realign its pension plans with UBS’s scheme in December, it added. The move follows an annoucement in September 2023 by UBS planning to fully integrate Credit Suisse’s Swiss business, expecting to close the merger in 2024, with the pension schemes of both banks potentially becoming one.
The same pension model will apply to all employees in Switzerland once the integration of Credit Suisse has been completed, as the first phase of strategic integration of the banks is complete, UBS added today.
This leads to an increase of pension and post-employment benefits of $375m, resulting in a one-time pre-tax loss in the fourth quarter of $245m (CHF207m), under International Financial Reporting Standards, UBS added in the statement.
The schemes’ alignment will lead to an increase in terms of pension benefits for the majority of employees who are members of the Credit Suisse pension fund in Switzerland, Credit Suisse Pensionskasse said.
Benefits will improve because of higher employer contributions and because of the possibility of withdrawing pensions for all the amount saved, the scheme added.
However, Credit Suisse employees closer to retirement will experience a negative impact from the realignment of the two schemes, as the conversion rate used to calculate pension payouts will decrease, it added.
For this reason, the bank is taking measures to support employees older than 50 years old on 31 December 2026 transition to the new system, it added.
Overall, nothing will change for pensioners of the Credit Suisse scheme: they will remain members of the Credit Suisse fund as the realignment progresses, with pensions protected by law.
The decision on the possible future merger of the two pension funds has not yet been taken, Credit Suisse said updating on the plan, adding that merging the pension funds of the two banks was a “complex undertaking” that had to take into account different regulatory and legal aspects.
An expert with knowledge of the Credit Suisse pension fund told IPE that a precondition for the merger is that the pension funds have at least in principle an “equal” funding ratio, to protect the rights of all beneficiaries of both pension schemes.
Credit Suisse’s Pensionskasse had an economic funding ratio of 119.3% at the end of 2022, according to scheme’s 2023 financial statement, while the economic funding ratio of the UBS Pensionskasse stood at 130.1% as of the end of January 2023.
The new UBS pension fund will also have to deal with the question of benefit levels and a new investment strategy, according to Heinz Rothacher, chief executive officer of consultancy Complementa.
Another obstacle is represented by 1e plans that are offered by Credit Suisse Pensionskasse but not by UBS. 1e plans will remain in place, but closed for further contributions, UBS said today.