Delegates at a conference of the pensions supervisory authority of the canton of Zurich (BVS) last week were treated to a heated debate over cutting, or “adjusting”, guaranteed pension benefits.
Olivier Deprez, a pensions expert and a member of the board of the Swiss actuarial association, argued passionately in favour of supporting trustee boards address funding problems, even if it means, in his words, “adjusting” pensions already being paid.
“There is only one entity responsible for the financial security of pension funds and that is the board of trustees,” he stressed.
He called upon the Swiss pension fund association, ASIP, to support a lowering of pension benefits by funds trying to shore up their financial stability.
Addressing the director of the association, Hans-Peter Konrad, Deprez continued: “When the entity responsible for the pension fund is trying to find solutions to the benefit of active members and beneficiaries - including involving existing pension benefits - then ASIP has to support this approach.”
Konrad had earlier spoken against cutting pensions already in payment, saying that this was a fundamental question that went to the heart of the pension system and needed to be decided at the political level.
It cannot be dealt with without a “fundamental debate about whether this systemic correction is wanted” taking place, said Konrad.
Deprez disputed the reference to cutting pension payouts, preferring to refer to “adjusting” benefits.
Thomas Schönbächler, chief executive at BVK, the pension fund for employees of the canton of Zurich, argued that it wasn’t right “to change the rules in the middle of the game”, but that levels for new and future pension benefits should be set at the correct actuarial level – which would mean lower payments for future retirees.
Konrad took a similar stance, saying ASIP was not against the introduction of flexible pension models for new and future beneficiaries, but that cutting pensions that were promised at a certain level is “the wrong way” for pension funds to address funding difficulties.
Deprez reminded the other panellists, and delegates, that pensions in payment were not always “sacrosanct”, as as this only came into effect as a result of legislative change in 2005.