The Swiss Occupational Pension Supervisory Commission, OAK BV, has given the green light to new technical guidelines for experts having the task to assess the financial situation of pension funds.

The Swiss Chamber of Pensionskasssen experts, SKPE, an organization of independent experts advising domestic pension funds on legal, administrative and investment matters, issued the guidelines replacing an older 2016 version.

Consulting activities could change under the new rules as a result.

The new guidelines – called FRP 5 – refer to the minimum requirements to evaluate pension funds in accordance with Art. 52e paragraph 1 of the occupational pension law (BVG).

According to article 52e paragraph 1, occupational pension advisers will periodically check whether a pension fund can meet its obligations, and whether regulatory, actuarial provisions on benefits and financing comply with statutory provisions.

Experts will recommend the supreme body of the pension fund in particular on the technical interest rate and technical principles in general, and measures to take in the case of underfunding.

According to the latest guidelines, advisers will examine the financial situation of a pension fund based on 13 elements including the conversion rate and its financing, the number of insured persons, active and retirees, existing technical provisions, administrative costs, and sources of profit and losses.

They will also assess the relationship between returns to be achieved to keep a pension fund to a certain funding level – Sollrendite – with expected returns.

In addition, the advisers will conduct an assessment on the restructuring capability of a pension fund and its fluctuation reserves.

At the end of the process, the experts will summarise essential findings and recommendations in a report and recommend measures to take to the highest governing body of a pension fund.

Based on the results of an assessment, experts will recommend an expected development plan for a pension fund over the medium term, according to the guidelines.

Advisers will confirm that the technical interest rate and actuarial principles used by a pension fund are appropriate, and that the pension fund will meet its obligations.

They will also be able to comment on whether a pension fund has to take measures to remedy their underfunding positions, or if the measures taken to cover actuarial risks are sufficient and the target size of the fluctuation reserve is adequate.

According to the BVG law, if the higher governing body of a pension fund does not follow such recommendations, experts can turn to the supervisory authority. The new technical guidelines apply from 31 December 2021.

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