Switzerland's second pillar pension system could be torn apart as a result of bilateral social security negotiations with the EU, according to pension fund associations and pro-viders, who held an emergency meeting on the issue in Berne last month.

Discusion at the talks, convened by Peter Wirth, head of Switzerland's second pillar pension forum, centred on the threat that under current EC proposals, the country's occupational schemes to which all Swiss employees earning over Sfr22,000 ($15,000) adhere, and which function on a part first pillar, part employee benefit basis, will be included in European regulations covering social security, not pensions.

This, it is argued, could lead to unnecessary complication of the Swiss system, or even abolition by some companies of the well funded and developed occupational pensions packages available today.

According to Wirth, the problem is that only part of the two-tier Swiss system should be covered by EU social security directives. Any blanket policy, he says, could spell great danger for the existing system in the long run.

We are very much opposed to what is presently being suggested by the negotiations. Nothing could be more unhelpful for companies than being covered by social security regulations, which don't take into account the pension fund aspect of the Swiss system. The outcome will either be that Swiss companies attempt to adopt a split state/private arrangement, or simply abandon the extended employee benefit aspect altogether." He fears the negotiations could lead to legislation very shortly.

Hans Rudolf Schupisser, head of social security affairs at the Swiss Employers Association, says they are also perturbed about the current situation, but is critical of the Swiss themselves for their lack of foresight on the matter. " We are only now just realising the situation could become very uncomfortable for Swiss companies finding themselves caught between two pillars; that of social security and pension funding. I believe we should only accept these negotiations if we can adapt the Swiss second pillar to the pension directives of DGXV commissioner Mario Monti," he says.

However, Verena Brombacher, delegate on social security matters for the Swiss government dismisses the uproar as 'pure fiction'.

"This is an old cookie being re-baked by pension fund bodies with their own interests in mind, and they are confusing the issue accordingly. What we are negotiating with the EU is how Switzerland will apply EU directive 1408 on the social security rights of migrant workers.We don't think this will prompt any changes within companies to their second pillar pension provision," she comments.

Brombacher says Swiss supplementary pension fund organisations are disputing issues which the EU has not even decided yet. Firstly, she argues, Switzerland will have its own exemptions from any EU directive, and secondly, she says, coverage of Swiss supplementary funds by EU social security regulations will be irrelevant, next to the country's own legal structure. Hugh Wheelan"