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Swiss pension fund group criticises regulator on proposed reforms

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The Swiss regulator for second pillar pensions, the Oberaufsichtskommission (OAK), is facing major criticism from pension fund association Asip over planned reforms.

The lobby group has this week published statements related to a number of consultations on draft legislation currently being discussed in Switzerland.

Among the draft proposals is a revision of the way the technical interest rate – the rate used to determine the return on capital for pensioners in the second pillar – is calculated.

In the autumn, a group of experts published a proposal on how to determine a guideline maximum rate. Actuaries at each Pensionskasse would then have to decide on the most suitable rate for the individual pension plan.

The OAK has proposed to make this maximum technical interest rate binding for all Pensionskassen.

In its statement on the draft legislation, Asip said that the OAK’s proposal would mean “there will effectively be no more flexibility” for actuaries.

The pension fund association also noted the proposed transition phase of five years was “disproportionate”, and that it favoured the seven-year-period suggested by the expert group.

Asip called on the OAK to wait for a vote on the new proposals by SKPE/CSEP, a group of Swiss pensions actuaries, to take place on 25 April 2019.

“It is not the OAK’s remit to issue a decree telling the pension fund experts which recommendations to make to Pensionskassen,” Asip said.

Risk control rules rile Asip

The pension fund association also criticised a proposal by the supervisor for a decree on new risk control regulation for collective pension plans.

“With this decree the OAK is overstepping its authority,” Asip stated, echoing criticism already voiced by various collective pension plans.

Asip criticised the additional effort and resources it would take for collective pension schemes to gather and report all the information demanded by the supervisor.

It also questioned the OAK’s legal competence in this matter, as there was “no legal basis” for the regulator to issue general decrees on governance, transparency or decision making structures within a Pensionskasse, Asip argued.

Ever since the creation of a single supervisory body for the second pillar was first discussed almost a decade ago, some commentators have voiced fears of increased regulation and possible superfluous decrees being issued.

Asset allocation rule changes

In September, a revision of the law on Swiss collective pension investment foundations – Anlagestiftungen or fondations d’investissement – was proposed to give them more leeway in asset allocation and address some governance issues. 

In response to the related consultation, Asip welcomed the changes but emphasised that “the OAK does not need any further authority” over the vehicles, which are frequently used by Pensionskassen.

 All of Asip’s statements (only in German) can be downloaded on its website.

Related images

  • Night view of Bern and Aare River, Switzerland

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