Media conference: Swiss Pension Funds in Autumn 2014

 Occupational pensions overshadowed by politics

Zurich, 17 September 2014 - the Swisscanto autumn conference on occupational pensions revolved around the question: how will pension funds survive the next ten years? The effects of demographics and low interest rate policies will place a heavy burden on pensions. The increasing interference of politics in market sizes is posing an ever greater threat to the security of occupational pensions. During the event, the new edition of the "Swiss Pension Funds" study, which contains a series of contributions by influential exponents of occupational pensions, was also presented alongside detailed survey results. Recommendations as to the forecasts for capital markets were cautious.

Pension funds are obliged to deliver on far-reaching promises about performance and unlimited guarantees for their beneficiaries. They have to do this not only under conditions of increasingly volatile and unpredictable capital markets, but also under the pressure of political requirements which no longer have much regard for real-world circumstances.

The media conference on the second pillar, traditionally organised by Swisscanto, approaches this situation from various angles. Gérard Fischer, CEO of the Swisscanto Group, by way of an introduction outlined the demands of the particular situation and responsibility of pension plans in the face of the prevailing demographic and financial developments. He called in particular for important parameters to no longer be politically defined since it posed an increasing threat to occupational pensions. In his view, the proposal by the Federal Office [Bundesrat] for a future-proof "Retirement 2020" clearly falls short of meeting this requirement.

Hanspeter Konrad, Director of the Pension Funds Association ASIP, expressed similar misgivings. The growing number of regulations places a heavy burden on pension funds and increasingly limits their room for manoeuvre. He stressed the importance of the top-level managing body in a pension fund cooperating with the regulatory authorities. With this in mind, he criticised the various regulations of the Occupational Pensions Supervisory Commission (OAK) caught between pension security and regulations.

Othmar Simeon, Head of Pension Fund Consulting at Swisscanto, showed how the legal requirements affect the financial position of pension funds. The main consequence is an enormous redistribution of several billion francs per year from the active workforce to pensioners, the like of which was never planned for in the BVG. Based on the model of variable annuities, he demonstrates how enhanced flexibility can make achieving performance more certain as well as more equitable.

Martin Eichler, chief economist at BAKBASEL, presented facts about changing demographics. Switzerland is right on the cusp of this 'demographic' change - the transition from a growing to a shrinking population. In terms of economic analysis and the development of retirement provision schemes, another change is even more important: the transition from a growing to a dwindling economically active population. This shift is predicted to lie in store for Switzerland at the start of the 2020s.
What are the reasons for this? Firstly, the baby boom: using the AHV [Swiss Old Age and Survivors' Insurance] as an example, extensive simulation calculations are able to show the evolution, extent and implications of this phenomenon. Immigration is the second major influential factor in this demographic trend. Eichler indicated a variety of development paths for future immigration and explained the diverse implications for retirement provision schemes.

In the case of how occupational pensions have developed, a great deal depends on capital markets. For years now, these have been marked by central banks' unprecedented and extremely low interest rate policies. Peter Bänziger, Chief Investment Officer at Swisscanto, analysed the share situation and the potential consequences that a change to the current monetary policy could have on rates. To illustrate his point, he went into the events in Japan from 2001 to 2008, years which were also characterised by a substantial increase in liquidity followed by a subsequent reduction. The implications for the stock exchanges were felt after a delay of around two years. Bänziger was rather conservative and advised that gains could gradually be made from further rises in rates in view of the overvaluation to be determined.

Download or order the "Swiss Pension Funds 2014" study

The new edition of the leading study within the Swiss pension fund sector includes data on the structure and performance of pension plans, comments on the results of the Spring 2014 survey and contains articles written by prominent authors on issues related to the second pillar.

With numerous tables and diagrams, this volume is available in German and French and you can either:

• download it as a PDF file at www.swisscanto-pk-studie.ch or
• get it free-of-charge as a printed publication from:
  Telephone +41 58 344 44 70, [email protected]
  Swisscanto Asset Management AG, Europaallee 39, 8021 Zurich

Your contact:

Daniel Graf, Head of Media Relations
Tel. +41 58 344 44 42, [email protected]

Swisscanto Holding Ltd., Europaallee 39, 8021 Zurich
Web: www.swisscanto.ch

Swisscanto - a leading Asset Manager

Swisscanto is a leading investment fund provider, asset manager and provider of occupational and private pensions solutions in Switzerland. The joint venture of the Swiss Cantonal Banks manages client assets of CHF 52.6 billion and employs 400 people in Zurich, Berne, Basle, Pully, London, Frankfurt and Luxembourg (30 June 2014).

As a proven specialist, Swisscanto develops high-quality investment and pension solutions for private investors, companies and institutions. Swisscanto is regularly recognised nationally and internationally as an outstanding fund provider. Swisscanto is also famous for its pioneering role in sustainable investments and for the "Swiss Pension Funds" study, which it publishes annually.