Swiss government rejects ideas for more pension fund comparability

A proposal for a new set of figures to be reported by Swiss Pensionskassen has been rejected by the Swiss government for cost reasons.

Two years ago, consultancy PPCmetrics was commissioned by the Swiss government to look into the financial figures currently reported by Swiss Pensionskassen.

It was to determine whether these figures gave an indication of the true economic situation of a pension fund and which indicators might make their reports more comparable.

The final report by PPCmetrics has now been published (see link below), and includes a proposal for new key figures to be reported by the Pensionskassen. The suggestion was that these would allow the supervisory authorities to devise a traffic-light system to identify and monitor those pension funds whose financial sustainability is compromised.

However, the government has decided it will not make any new set of key figures mandatory.

“For the government it is questionable whether the profit of a unified model would justify the costs,” it said in a press release.

Lukas Riesen, partner at PPCmetrics, thought it was question of political will more than costs.

“The government has decided against increased transparency,” he told IPE.

He added: “The basic information for the figures we proposed is already being calculated by the pension funds – it would have been a simplification to concentrate on a few meaningful figures.”

In their report PPCmetrics found that many figures currently reported by the pension funds were not really helpful.

Current standard indicators like the funding level do not take into account the technical parameters applied to calculate it or the ratio of active to retired members in a fund.

Riesen does not think any supervisory body will go against the government’s position by prescribing the use of the proposed new set of key indicators. 

“But the economic reality will force many pension funds to look at their true financial status,” he said.

According to him many pension funds and also some supervisory authorities that are “taking risk management seriously” are already calculating economically true funding levels and other amended benchmark figures.

“Our set of key figures takes a longer-term look at the financial situation of a pension fund both from the perspective of a provider as well as that of an active member,” he explained.

Under current regulations pension funds are free to report funding levels based on any parameters they choose, but an economically true valuation would mean they have to report a lower funding level.