Swiss pension funds’ consolidation process is expected to continue, as schemes seek economies of scale to reduce costs and address growing skills shortages, consultants have said.
Consolidation remains particularly evident among company-sponsored pension funds joining multi-employer schemes – Sammel- und Gemeinschaftseinrichtungen (SGE), according to Stefan Beiner, partner at consultancy c-alm.
Mergers between pension funds typically take place in the context of corporate mergers, while “pure mergers between pension funds” are rare, Beiner said.
Medium-sized and large pension funds tend to consolidate less, as they already have sufficient resources and in-house expertise.
Key drivers of consolidation include the search for economies of scale, rising regulatory requirements, efficiency gains, the ability to pool resources in larger entities, shortages of skilled workers and the need for greater professionalisation, Beiner added.
“Today, around three-quarters of active members are already enrolled in SGEs, that are significantly increasing their importance. This also noticeably intensifies competition among them,” he said.
As a result, the occupational pension supervisor, the Oberaufsichtskommission Berufliche Vorsorge (OAK BV), considers financial risks “particularly acute” at multi-employer pension funds.
Obstacles to further consolidation include what Beiner described as a “traditional, paternalistic approach” and, in the case of multi-employer schemes, more complex structures that can slow decision-making.
Overall, Beiner said the consolidation trend is likely to persist, with competition among multi-employer schemes expected to intensify further.
Figures from the Federal Statistical Office show that the number of pension funds fell from 1,320 in 2023 to 1,285 at the end of 2024, with mainly small schemes disappearing.
Costs borne by very small pension funds – including asset management expenses and liabilities-related costs – are an additional driver of consolidation, said Oliver Gmünder, head of relationship management at Complementa.
Professionalisation within the second pillar, such as managing complex investments and navigating a changing regulatory environment, is also increasing demands for specialist know-how, he added.
It is difficult to fill positions on the boards and management bodies of pension funds, said Complementa senior investment consultant Tseten Gyalzur.
German occupational pension schemes face a similar challenge, with difficulties in recruiting skilled workers prompting greater outsourcing of asset and risk management functions.
Complementa expects consolidation in Switzerland to continue over time, although a slowdown is possible, Gyalzur said.
Nico Fiore, managing director at Inter-pension, the organisation representing Swiss multi-employer pension schemes, said strategic mergers between multi-employer pension funds are possible but remain very rare.
“This is less due to risk considerations or structural weaknesses, but rather to the fact that there is no immediate need for them,” he said.
The market continues to offer substantial growth potential.
Alongside consolidation, Fiore pointed to a clear shift away from traditional pension plans with repayment guarantees on savings towards schemes with more aggressive investment strategies and fewer guarantees.
“Furthermore, both the number of members and the number of affiliated companies continue to rise,” he said.
Against this backdrop, the market for multi-employer pension funds remains dynamic and “by no means saturated”, explaining why consolidation is not yet “on top of the agenda” for the sector, Fiore added.
