SWITZERLAND – The Swiss Federal Office for Social Security has set up two expert commissions to look into the country’s occupational pension system.
The two commissions will have to analyse structural problems regarding the country’s pension funds.
The first commission will be looking into an appropriate legal structure for pension institutions, and will be headed up by Hans Michael Riemer, professor of private law at the University of Zurich . At present, there are three types of pension fund - the most common being a foundation.
Says Eryka Schnyder, head of legal affairs for occupational benefit plans at the federal office for social insurance: “The problem resides in collective foundations of insurers or banks, where there are several laws which apply. This creates problems, especially if these laws are not compatible with one another.”
“This is more so for insurance legislation which, in parts, contradicts the legal minimum standards of occupational benefits law. So the first commission will have to elaborate standards for a new legal form of pension funds to enable to take into account the objectives of the pension fund (occupational benefits) legislation. A kind of independence between funds and insurance companies is required,” adds Schnyder.
The second commission will examine the structure of the supervision of pension funds, focusing in particular on investment policy. “The commission will analyse the necessity of centralising the supervision of funds into the hands of one authority (presently there are 27 different supervision authorities) and to create links with the regulation of the capital markets,” explains Schnyder. This commission will be headed up by Professor Juerg Bruehwiler, lecturer of work, social security and private law at the University of Bern.
The two commissions will present their case to the Federal Assembly at the end of the year, and draw up a bill at the end of 2004.
According to Association of Swiss Pension Funds (ASIP), two in five of Switzerland’s occupational pension funds are underfunded. In May, following a consultation with the social partners and a commissioned panel, the Swiss government agreed to reduce the minimum income guarantee rate to 2% from 3.25% in January 2004 to take pressure off pension funds.