Swiss government approves pension funds oversight rules

SWITZERLAND - The Swiss government has approved a draft law designed to improve pension regulation and tighten best practice standards for pension fund (Pensionskassen) managers.

IPE reported in March broad details of the draft law included a ban on so-called ‘parallel running' - where pension fund managers personally trade the same shares as their pension funds - and proposed the introduction of a new national regulator to advise Swiss cantons in their oversight of Pensionskassen.

But this finalised draft law, now sent to the Swiss parliament for approval, contains several new important details.

According to the BSV, a government agency responsible for the second pillar, the ban on parallel running is flanked by others prohibiting the payment of kickbacks or other dubious fees and rebates which might emerge in the fund's relations with financial firms.

Under the new rules, pension fund managers will also be required to pass on any fees incurred in their relations with financial firms.

However, contrary to the government's initial proposals, there will be no general disclosure requirement on the private investments of pension fund managers.

"The fact is we simply couldn't manage a review of more than 10,000 dossiers," said Anton Streit, deputy director at the BSV.

And despite the introduction new national regulator, Swiss cantons will also have more say in Pensionskassen oversight.

"The government's job of directly supervising Pensionskasse, that have a national or international character, will be handed to the cantons," added the BSV.

While the new regulator will be able to set standards for Pensionskassen supervision and monitor irregularities in that practice, it cannot overturn regulatory decisions made by the cantons.

Arrival of this law follows several embarrassing affairs in the Swiss pension fund industry over the last year.

Last autumn, it emerged Roland Rümmeli, a former investment head of the CHF3.7bn (€2bn) Pensionskasse for Siemens, had accepted CHF500,000 in kickback payments from a hedge fund named Auriga. Siemens has since recouped CHF400,000 and filed criminal charges against him.

Last month, Professor Carl Helbling, one of the architects of Switzerland's corporate pension system, resigned from the Swiss pension fund Gemini following reports suggesting he had received fees Helbling for dealing with financial firms on Gemini's behalf.

Instead of passing on the fees to the fund - estimated then to be worth millions of Swiss francs - Helbling and protegé Oskar Leutwyler kept them but according to Gemini, this situation has now been rectified with Helbling's resignation.

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