EUROPE - The Swiss Federal Council has made some last minute changes to regulations governing the second phase of the BVG pension reform on partial liquidation, ruling thatthe claim on surplus can now be collective as well as individual.
Initially, the council had said that such a claim could only be made on an individual basis, a move that was dismissed by consultants as lacking any legal foundation.
Peter Zanella, benefits practice leader at Watson Wyatt, said: They [the Federal Council] initially wanted pension funds to assign it to individual accounts. Funds would then have been forced to distribute the surplus on an individual basis.
“Now if you have a collective claim, that can also be used for future fluctuation reserves for the new pension fund. So you have a bit more leeway, more flexibility. The impact of the first version would have been that the releasing pension fund would have been forced to increase the benefits of the leavers.
“Though this is still technically possible, pension funds at least have the option of collective or individual.
However, the more important issue of transfer of technical and fluctuation reserves under partial liquidation remains unaltered. The reserves can be transferred only if insurance and investment risks are also transferred and therefore since everycash payment is without risk, it follows that there can be no claim on fluctuation reserves.
Zanella added: All main stakeholders in the Swiss pension community are aware that the whole second phase legislation was hastily and sometimes sloppily crafted. I expect that future clarifications will be necessary to enable a good implementation of the reform.
This week's edition of Professional Pensions is out now.
Industry Voice: Sponsored by Eaton Vance
BNY Mellon has launched a range of reporting tools to help institutional investor clients track and evaluate portfolio investments based on environmental, social and governance (ESG) issues.
PP speaks to BESTrustees director Heather McGuire about her views on the CMA's review into the investment consultant and fiduciary management markets.