SWITZERLAND - Administrative costs in Switzerland's second-pillar pension system are far higher than expected, and only a reduction of the overall number of pension funds or a "drastic" simplification of the entire system would solve the problem, a government-backed study has found.

Last year, the government commissioned two studies into administrative and asset management costs in the second pillar.

In the administrative survey, researchers placed the total cost for the second pillar at approximately CHF1.8bn (€1.45bn) in 2009.

This means costs per pension-scheme member came to just over CHF390 - 30% more than the government's initial estimate of CHF300.

The study also concluded that the costs were an "inherent" part of the system, driven largely by day-to-day operations, and that no single measure could be taken to lower them.

The researchers - from the Social Ministry and the Department for Economy - added: "A significant reduction of the administration cost would only be possible with drastic simplifications of the occupational pension system."

Another possible solution might be the "standardisation" of regulations for pension funds or a "significant reduction" of the number of schemes.

The study's conclusions echoed a number of recent calls for system simplification by Swiss MPs.

Meanwhile, the survey on asset management costs also showed far greater costs than initially estimated, with the main cost driver being alternatives.

The Swiss Social Ministry said the study would serve as the basis for "further considerations", as part of a more comprehensive study on the second pillar currently being finalised.