The Swiss federal government has published draft legislation aimed at preventing local governments from being represented on the boards of regional pension fund supervisors.

The proposal runs counter to that of a parliamentary initiative on the subject and means that there is now “competition” between the two, according to Dominique Favre, director at As-So, the supervisory authority for occupational pensions in western Switzerland.

The reform proposal, announced by the government last week, was presented mainly as “modernising” the first pillar, but it also touches on aspects of the second pillar.

One of these includes provisions to “guarantee the independence of the regional supervisory authorities” by forbidding members of Swiss cantonal governments to sit on the authorities’ supervisory bodies.

The government had previously said it would draft legislation on this and in so doing has effectively backed the position of the federal supervisory authority. The federal authority said having government officials from the cantons on regional supervisory authorities’ oversight boards was incompatible with the legal requirement that supervisory authorities be independent. Equally, the authority said, it was not good governance.

There are seven regional occupational pension supervisory authorities in Switzerland. Some of these were formed by several cantons in a given region. The ones for western, eastern, and central Switzerland have representatives of the cantons’ executive on their board of directors. They disagree with the federal supervisory authority’s position.

Fighting their corner is a member of Switzerland’s upper chamber of parliament, Alex Kuprecht, from the Swiss People’s Party. In June last year he called for an amendment to the law on occupational pensions to “reinforce the autonomy of the cantonal and regional bodies charged with supervising occupational pensions institutions”.

As-So’s Favre claimed the government hoped Kuprecht’s initiative would fail, given it ran counter to the government’s reform suggestion. 

“We now have competition between the Kuprecht intiative and the government’s draft legislation, which is the result of the will of the federal supervisory authority,” he said.

Kuprecht’s proposal was endorsed by the upper chamber’s social security and public health committee in November, and is scheduled to be discussed by the same committee in the lower house in May. It should go to parliament in the autumn, according to Favre.

The federal government is consulting on its reform proposal until 13 July. Dealing mainly with matters of pension supervision, it is separate to Altersvorsorge 2020 (AV 2020), the major pensions reform package that was narrowly passed by parliament last month and will be voted on in a referendum in September.

Favre said it had not been feasible for the government to include a rule about the composition of the regional supervisory authority boards in the AV2020 package given the latter’s focus, and said that it had instead found an opportunity to house it in the reform proposal it had been targeting to modify first pillar supervision.  

According to the government, there are three main thrusts to this reform proposal. One involves adopting a forward-looking and risk-oriented approach to supervision of the first pillar fund and supplementary social security benefits. A second is for governance to be strengthened, and a third relates to standardising and updating information technology and data systems.

Another second pillar aspect, besides that relating to the regional supervisory authorities, has to do with making more precise the tasks carried out by occupational pension “experts”.

Read more about the AV2020 reform in the next IPE magazine

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