Switzerland’s regulator – the Oberaufsichtskommission, or OAK – is to unveil in the coming months a catalogue of minimum risk standards to be applied by all Pensionskassen from next year.
Speaking at the annual BVS conference, the regional supervisory body for the canton of Zurich, André Tapernoux, head of risk management at the OAK, confirmed that the regulator would decide on the standards “over the next few months”.
The introduction of a unified risk-assessment catalogue has been under discussion by pension fund representatives, industry experts and regional supervisory authorities for the last year.
One of the chief proponents has been BVS director Roger Tischhauser, who has argued that regional supervisors need a standard by which to measure Pensionskassen.
At the conference in Zurich, Tapernoux agreed, acknowledging that regional supervisory bodies required “reliable individual figures” for each Pensionskasse.
He said the OAK had therefore concluded it was “useful to make it mandatory for Pensionskassenexperten to calculate certain key figures”.
Tapernoux told IPE the regulator had not yet decided which parameters the new catalogue will include, but he did say they would be taken from existing guidelines issued by the SKPE, the chamber of pension fund experts.
In those guidelines (FRP 5), the SKPE included a ‘tool kit’ of risk factors to consider with respect to the financial security of the pension plan, its recovery potential, regulatory requirements and ongoing financing.
Among the proposed calculations were changes to the funding level, with additional contributions during recovery periods, or a more holistic view of expected returns from assets in view of liabilities.
Martin Wagner, drawing on his experience as managing director at the Credit Suisse Pensionskasse, told delegates that trying to increase a funding level by 100 basis points would entail a 700bps increase in contributions from salaries.
In his role as president of the SKPE, Wagner added that the FRP 5 guidelines helped pension funds calculate possible scenarios before acting on them.
At the OAK, Tapernoux stressed that Pensionskassen would “only have to calculate figures relevant to their pension plans”.
He added that the supervisory body was aware of the extra effort and costs involved but pointed out that the OAK would discuss “useful solutions” for smaller Pensionskassen.
Wagner pointed out that some lay trustees at Pensionskassen would need guidelines to “help them along”, and argued that mandatory calculations were “not a corset but an aid”.
He said the FRP 5 guidelines had been set up using “key figures that any expert can calculate easily, without too much additional cost”.
Reacting to audience comments regarding further consolidation in the second pillar, Tapernoux said it was “not the OAK’s intention to speed up this process by introducing these risk parameters”.
See the latest issue of IPE magazine for more on individual investment choices in the Swiss second pillar