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Swiss parliament rejects tougher investment rules

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  • Swiss parliament rejects tougher investment rules

SWITZERLAND - The smaller chamber of the Swiss parliament has rejected a motion by the Social Democrats to ban certain types of investments, such as hedge funds, within pensionskassen.

The Social Democrats want to forbid pensionskassen from investing in hedge funds, structured products and actively-managed funds.

The party argued these instruments had a short-term investment horizon and carried too high a risk, and were therefore not suited for pensionskassen.

A representative of the Social Democrats in the so-called "Ständerat", the smaller chamber of the Swiss parliament, argued there was no scientific evidence that active management led to better results than passive management and claimed they were only likely to earn banks more money.

"It is interesting that banks avoid these actively-managed funds in their own pensionskassen," said Simonetta Sommaruga, a Social Democratic representative.

The party also demanded there be compulsory hedging of exchange rates in situations where pensionskassen hold investments in foreign currencies.

However, critics argued the investment rules already in place for Swiss pensionskassen were sufficient to let each fund decide for itself how much risk it could take.

Others ministers pointed out investing only in bonds would never yield the necessary returns, and the proposals were eventually rejected by 18 to nine votes.

At the same time, however, 20 representatives in the assembly voted with a Social Democrats proposal obliging pensionskassen to disclose the names of any consultants they have used to arrive at investment decisions.

Only six delegates voted against this part of the motion, even though a government representative pointed out it might be difficult to implement as pensionskassen use a wide range of advisers and consultants.

If you have any comments you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email julie.henderson@ipe.com

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