The Swiss occupational pension supervisory commission – Oberaufsichtskommission Berufliche Vorsorge (OAK BV) – is calling for more tailored regulation for collective pension schemes as president Vera Kupper Staub claimed the existing regulation “is still geared towards company pension funds and contains little on the specific needs of collective pension funds”.
The number of pension funds in Switzerland is constantly shrinking. While 10 years ago, there were still well over 2,000 pension funds – both company schemes and funds for public entities such as cantons — their number has dropped to just under 1,400 in 2023.
Mostly because of regulation, rising complexity in asset management and reporting, smaller companies are hitching up their pension funds to collective schemes known as ‘Sammel-’ or ‘Gemeinschaftseinrichtungen’.
Meanwhile, over three quarters of workers in Switzerland are covered by one of these pension funds which combines the pension plans of various companies. A decade ago it had been only half the workforce.
During an industry event in Zurich last week – the Fachmesse und Symposium 2. Säule (second pillar trade fair and symposium), Kupper Staub told delegates that this is becoming problematic.
“We are currently adapting the existing regulation to these collective schemes,“ she said during a panel discussion at the event.
The so-called ‘Sammel-’ or ‘Gemeinschaftseinrichtungen’ are in competition with each other to gain new members, whereas company pension funds are usually closed to outside members.
Combining various pension plans under one roof makes the collective schemes more complex and often less transparent. Kupper Staub said: “The possibility for conflicts of interest is higher and they need more governance.”
In the past, some pension providers had been criticised for prioritising the gain of the company running the collective scheme over that of the future pensioners.
“If, like it is the case right now, collective schemes are making up a large part of the industry, it makes sense they have their own regulation,“ Kupper Staub noted. But she stressed that it would have to be “streamlined and targeted“.
Nico Fiore, managing director of Inter Pension, also warned delegates about excessive regulation.
He is convinced that pension funds that are in competition with others “are more transparent, more sustainable and more digital“ than others, “even without regulation”. But the already heavily regulated pension fund market does not need further regulation.
“Instead, we should rely on self-regulation, as we do at Inter Pension with our new Code of Conduct,” he noted, referring to the its own code of conduct for its members.
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