The social security and health committee of the National Council (SGK-N), the lower house of the Swiss Parliament, has voted in favour of submitting a motion to discuss pension funds’ obligations on costs disclosure.

The committee shares the view of the Swiss Federal Audit Office (SFAO), that information on administrative costs should be easily accessible and comprehensible for the general public, it said in a statement.

Only a minority of the members of the committee considers the existing rules on pension funds’ cost transparency “sufficient”, rejecting the motion, it added.

According to the motion, the Federal Council will have the task of changing the legal framework to oblige second pillar pension funds to disclose their administrative costs.

In Switzerland, Pensionskassen are not legally required to disclose their costs, but some have chosen to do so. Pension funds are, however, required to inform their members if they request such information, but in practice such inquiries are rare.

Schemes rarely set out strategies to reduce their costs, even if this would improve cost transparency and better access to information, strengthening competition in an extremely sluggish market, therefore contributing to more efficient results, according to the motion.

Asset management costs are integrated “very late” into the decision-making process, with investment strategies determined exclusively on the basis of return expectations and risks, according to the SFAO.

Costs are taken into account only at the time of the strategy implementation or when awarding asset management mandates, it added.

The SFAO recommends that authorities actively work to raise awareness among the public on costs incurred by occupational pension schemes.

It analysed in detail for the first time in 2022 the statistics on pension funds, coming to the conclusion that annual costs amount to almost €6.8bn, including €5.1bn for asset management.

The analysis shows that cost transparency in occupational pensions is “satisfactory overall”, but some measures could be taken to improve awareness of this topic, it said.

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