Werner Nüssbaum is an enthusiast and a visionary – a formidable combination. The former director of pensions regulation for Switzerland, a ‘Road to Damascus’ experience happened when he was on sabbatical at California’s Stanford University, when the idea came to him of providing some method of knowledge transfer in the area of pensions design, regulation and supervision, based on the Swiss experience.
“When head of the regulatory office, I learned from working with people in this area both in Switzerland and abroad that education and knowledge are the most precious resources for improving systems. The key to reform is not money, but having people, who are educated and well informed,” he says.
The first concrete step was to form a non-profit body ‘Innovation second pillar’(ISP), set up in 1996. This provides a forum for exchange of ideas and a think tank for research and studies. Its overall aim is to encourage the modernisation of employee benefit systems. “The search for an optimal pensions system is a worldwide task,” says Nüssbaum. ISP draws support from 115 participants, who come from a wide range of interests including pension funds, insurers, banks, academics, supervisors and practitioners. The sharing knowledge was the basis of what was to become the Pensions Education Center (PEC), which commenced last year as a way of passing on the Swiss experience of pensions to those involved in pensions supervision and regulation, particularly for countries with embryonic pensions systems, or those in throes of reform.
Established as a Swiss foundation, PEC started off with a study trip last summer for Romanian officials, who visited Switzerland, meeting with people from different sides of the pensions industry. This was followed by a weeklong residential course in autumn designed for those in countries undergoing transition. “Participants had to be in an appropriate regulatory and supervisory role,” explains Nüssbaum.
The class sizes are kept small – no more than 25 – with the sessions being mainly in English. “The workshop sessions are discussions, where we can give advice based on our experience, ” he says. “We have some grants from the Federal Government to pay part of the tuition costs. Those participating are expected to pay part of the costs, though this can vary with country’s situation.”
This year, a weeklong course was held in May and another residential course is scheduled for October.
Nüssbaum is leading a further initiative, which could have even more far-reaching effects than PEC. This is an agency covering ‘Sustainability and institutional investment’. After the Rio and Kyoto environmental conferences, the Swiss government mandated the Federal University of Technology (ETH) to also look into the area of sustainable investments. “The strategic board on sustainability at the ETH asked me to examine, with the appropriate practitioners and researchers, the necessity and opportunity of setting up an operational body on sustainable investments.” The aim is to work on the issues with pension funds, to ascertain what are the criteria and indicators we need to use in this area.” The goal is to have an independent and scientifically acknowledged body look at sustainability issues in terms of the financial and social, as well as ecological aspects.
At this stage, Nüssbaum reckons the initial problem is lack of information and common criteria, despite the fact that there may be as many as 30 different bodies active in the area.
The operational body of this initiative is a Label Agency, which closely works together with the academic and the institutional sectors. The scope of this agency is to survey the investment holdings and investment funds whether they follow minimal standards of sustainability, from financial, ecological and social aspects.
Institutional investors are welcomed as shareholders of the agency, he says.

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