SWITZERLAND - The true amount of asset management fees paid by Swiss Pensionskassen is unclear and difficult to compare, according to consultancy Complementa.
Michael Brandenberger, head of Complementa, said pension funds that managed fewer assets through external funds were being "punished" under current Swiss accounting regulations because the asset management costs they publish in their annual reports are higher than those of other Pensionskassen.
While pension funds with a lot of external vehicles seem to have lower asset management costs, the figure in their accounts does not include fees paid in those external funds, which can account for as much as 70% of the total costs, he said.
"To create real cost transparency," he added, "it would be necessary to have legal regulations demanding the publication of a meaningful total expense ratio across the whole Pensionskasse."
This figure should include all used products and indirect investments, covering transaction costs, stock exchange fees, administration and managers.
Meanwhile, Swisscanto, in its 2010 Pensionskassen survey, has found that 42% of the 286 participating funds implemented recovery measures last year to deal with underfunding.
Of those, the majority (76%) suspended interest payments in 2009, while a third of respondents continued to do so in 2010.
In 60% of the Pensionskassen, employers made additional contributions, and another 33% said the responsible employer put aside buffers earmarked for pension provision.
Half of the funds levied higher contributions from employees.
In other news, the Swiss government has passed legislation that will allow Pensionskassen to offer older members to continue paying into their funds beyond their retirement age, up until they reach 70 if they continue working.
Moreover, members who reduce their working hours from the age of 58 can continue to pay the same level of contributions into the Pensionskasse as before their hours were cut.
A similar amendment to regulations has already come into effect for the third pillar.