SWITZERLAND – The Swiss government has followed the BVG commission's recommendation to keep the minimum interest rate at 1.5%, sparking criticism.
The expert commission, which reviews the minimum interest rate in the Swiss second-pillar pension system regularly, called on the government to keep the rate as is for 2013.
The government has now confirmed that it will follow this recommendation.
In a statement, the Swiss social ministry explained its decision.
"Given the record-low interest rates and the ongoing considerable uncertainties, the government decided to keep the minimum interest rate at 1.5%," it said.
Criticism for the government's move came principally from union representatives who claimed it was "denying workers a share in the good returns" by keeping the minimum interest rate low.
They claimed this was proof the government was bowing to the will of large insurers.
For next year, the government is looking to change its rate-setting procedure – fixing the minimum interest rate at year-end rather than in advance – in order to react to market developments quicker.
In other news, pension fund association ASIP has criticised an initiative by a Swiss MP who wants to require all pension funds to engage actively as shareholders.
Swiss pension funds hold around CHF621bn (€515.35bn) in domestic equities, amounting to around 6.5% of the total capitalisation of the Swiss stock exchange.
Although the association called on Pensionskassen to actively engage as shareholders, it warned about the implications of an initiative by MP Thomas Minder to force pension funds to do so under threat of punishment.
"This absolutely binding obligation exceeds the resources of many Pensionskassen, as the necessary diversification means they are not holding just a few individual shares but dozens or hundreds of them both in Switzerland and abroad," ASIP said.
The association also argued that each pension fund should have the right to decide not to engage as a shareholder in certain cases.
Lastly, new supervisory body OAK has issued its first formal directive on the necessary qualifications Swiss pension fund experts will need.
Such experts help pension funds set up technical parameters and evaluate the markets.
Under the structural reform, the OAK had been issued with the task of setting up a list of qualifications for these experts, which they will need to meet by February 2013.
The OAK also announced another formal directive for the first quarter 2013 on the subject of asset management costs of less transparent products and how to include these in annual reports.
For more on Switzerland's second pillar, see the December issue of IPE magazine.