Switzerland: The super regulator
Pierre Triponez, president of new Swiss federal pensions supervisory body - the Oberaufsichtskommission (OAK) - discusses his role and remit with Cécile Sourbes
"The new commission will undoubtedly restrict our sphere of activity." This is the conclusion many pension funds in Switzerland drew regarding the launch of the new federal pensions supervisory body - the Oberaufsichtskommission (OAK) - before it was introduced in June this year. Much has been written about the commission, but Pierre Triponez, who was named president of the OAK, insists that the new commission will not only play a regulatory role.
According to Triponez, the OAK's functions will be to help harmonise the currently fragmented Swiss pension system by making sure all the 2,300 schemes registered in the country comply with the federal rules already implemented.
"The pension system in Switzerland works perfectly well but we can improve it further", Triponez notes. "Under the new regulation, pension schemes will be directly supervised by the cantonal authorities where they are based in order to harmonise the legal provisions in the country."
In addition, the OAK will aim to implement greater transparency in the Swiss pension system, after a scandal at the Zurich civil servants' pension fund BVK was revealed last year.
The Zurich prosecutor in the corruption case against the BVK's former head of asset management, Daniel Gloor, finally filed charges in October this year including multiple cases of bribery and mismanagement with offences amounting to almost CHF1.7m (€1.4m).
"Again, the rules should be the same for all pension funds", Triponez adds. "Pension funds' managers should be completely independent from the company the scheme belongs to in order to avoid any potential conflict of interest arising in the future."
However, Triponez insists that the high commission will not only focus on regulation. The OAK will play a leading role to support local pension schemes in their operations and help them comply with regulation.
"The members of the commission and myself will look to build up a strong relationship between the OAK and the pension schemes", he says. "This will take time, and a lot of effort, but one thing is sure, we will not be able to reach this aim by implementing too restrictive directives."
The federal pensions supervisory body, which will start its operation in January 2012, will comprise a board of seven members, ranging from former pension funds' employees to academics and trade union representatives.
The appointment of the board clearly faced criticism, with the insurers' association SVV pointing out that the initiative of selecting independent specialists working part-time for the new higher supervisor would go to the wall as "this would practically exclude all experts working in the field".
But even though the members have now been named, Triponez refuses to comment on the future projects the commission will implement, arguing that the OAK is still in its infancy.
"Again, the only comment I could make would be that Swiss pension schemes are facing huge challenges at the moment and the OAK will do its best to help them, whilst making sure all the rules are rigorously respected", he stresses. "Like elsewhere in Europe, longevity is posing a serious threat to pension funds, which also need to ensure that all the investments made over the long-term will match contributors' needs when they will reach their statutory retirement age."
Commenting on the minimum interest rate in the second pillar, set the same day as the government announced the members of the board, Triponez argues that given the current financial turbulence, interest rates can no longer remain at their previous levels and therefore must be ‘reasonably' revised. However, this decision will be left to the federal government and the OAK will not get involved, he insists.
Since the creation of the second pillar in 1985, the minimum interest rate has been lowered from 4% to the current 2%. An additional cut is now expected for next year. The Swiss government having followed the recommendation of the occupational pensions commission, the minimum interest rate in the second pillar should go down to 1.5% in 2012.
"The second pillar system in Switzerland has been developed over several decades", Triponez concludes. "It would be a mistake to believe we will start everything from scratch and build up a new one. But it is still reasonable to think that we can add some improvements to the current system and make sure Swiss pension schemes comply with the same rules in the best transparent way."