The Swiss asset management and pension industries have welcomed Parliament’s decision to reject an obligation for pension funds to disclose administrative and asset management costs as a turning point to shift the focus towards returns and improved benefits.
Last week, the Council of State, the upper house of the Swiss Parliament, rejected a motion by the Social Security and Health Committee (SGK-N) of the National Council, the lower house of Parliament, requiring Pensionskassen to disclose administrative and asset management costs.
The Swiss asset management association AMAS rebuffed the motion in the run-up to the parliamentary discussion, considering it unnecessary, and claiming the issue of asset management costs for pension funds is often addressed by left-wing politicians to weaken second pillar occupational pensions in favour of the first pillar AHV social security funds.
Asset managers believe that any restriction or obligation on costs ignores investment performance and, in particular, the net return achieved by a pension fund.
“The net return, not the costs, is the most important criterion for determining the performance and efficiency of a pension fund,” Michel Bossong, senior pension expert at AMAS, told IPE.
This point is often glossed over in discussions, with second pillar schemes generating positive returns after deducting asset management fees of just under 0.5%, he added.
According to AMAS, pension funds returned over CHF90bn (€94.3bn) in 2024, and over CHF600bn since 2004, according to AMAS’ figures.
“The pension fund business is extremely competitive among asset managers in Switzerland. There is literally a fight for every basis point in terms of costs and returns,” Bossong said.
For Nico Fiore, managing director at Inter-pension, the organisation representing the interests of Swiss multi-employer pension schemes, the decision on asset management costs demonstrates that the Parliament considers the existing transparency to be sufficient.
“For pension funds, this decision means that they can continue to address the issue independently without being burdened by additional regulations. At the same time, it remains important to actively inform members about the existing cost disclosure mechanisms in order to further strengthen trust in the second pillar,” Fiore said.
Asset management costs – which are disclosed in annual reports and regularly reviewed to ensure they are in line with investment strategies and returns – have an impact on pension funds’s returns and future retirement benefits.
Therefore, efficient management of pension assets is key while pursuing a long-term investment strategy carefully balancing costs and returns, he added.
“It is crucial that pension funds do not focus only on keeping costs as low as possible, but strive for a balanced relationship between return, risk, and costs – this best serves the members in the long term,” Fiore said.
Many pension institutions tend to leverage economies of scale, transparent tenders, and broad diversification to optimise costs, he said.
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