SWITZERLAND - Switzerland's Social Democratic Party (SP) has fiercely attacked life insurers in Switzerland, accusing them of stealing money by violating a legal requirement on surplus earnings.
The accusation was, however, dismissed by Switzerland's BPV, which regulates the life insurers. Swiss life insurance association SVV also called the accusation "baseless".
In Switzerland, life insurers offer corporate pensions to employees not already covered by private or public pension funds, known as Pensionskassen. They also re-insure Pensionskassen.
The SP charges that in 2005, the life insurers did not comply with a legal requirement whereby 90% of their surplus earnings are distributed to the employees they provide a pension to.
"Last year, the life insurers held onto CHF400m (€250m) in surplus earnings that they were legally obliged to distribute," claimed Rudolf Rechsteiner, an MP from the Swiss SP.
Rechsteiner said the SP had arrived at the CHF400m figure after carefully reviewing the life insurers' disclosures to the BPV.
"If that had been done, the government would not have needed to lower the rate of conversion for occupational pensions to 6.8%", he added.
Late last June, the government announced that by 2014, the rate of conversion would be cut to 6.8% for both male and female employees. This means that by then, the annual benefit for a retired Swiss worker with CHF100,000 in accrued savings will total CHF6,800.
The current rate of conversion is 7.1% for male employees and 7.2% for female ones.
But in an angry response to SP's charges, SVV said: "The attacks are completely baseless. The life insurers comply with all legal requirements."
The association added that in fact, its members even distributed more than 90% of their surplus earnings to the insured. "The clients of the insured were able to fully profit from the higher returns on capital markets last year."
The SVV's defence was buttressed by its regulator. "There are no indications that the life insurers violated the legal requirement regarding the distribution of surplus earnings
last year," a BPV spokesman told IPE.
The spokesman also said the regulator had no comment on the SP's claims that the BPV "acts like an ally of the Swiss insurance association instead of an agency with true oversight".