Swiss Regulator Facing Criticism over Public Employee Pension Revamp

The OAK prefers a uniform interest rate for the public workers and two other retirement plans, which a lobbying group says is wrongheaded.

Oberaufsichtskommission (OAK), the regulator for the Swiss pension plan for public workers, is under fire from pension lobby group Asip regarding planned reforms.

Asip objects to several of the potential changes the regulator is looking to make, particularly the way the interest rates are calculated to determine return on capital for beneficiaries. 

Switzerland has a three-part pension system. Aside from the program for public employees, there is a separate system for elderly, orphans, and surviving spouses, and a voluntary plan for the private sector.

The OAK wants the same rate to apply to all pension programs, which Asip says will kill the flexibility for actuaries, and that the technical interest rate of a pension fund “should not deviate significantly from the risk-free market interest rate.”

OAK also wants the initial five-year transition phase for this measure gone, deeming it “disproportionate.” The regulator instead wants to move forward with the expert group’s seven-year proposal.

Asip said the organization should wait until April 25, when other proposals from Swiss pension actuary group SKPE/CSEP, will be ready. The lobbyists say they prefer that to a hasty reform, saying it is “not the OAK’s remit to issue a decree telling the pension fund experts which recommendations to make.”

Asip also objected to an OAK risk control proposal, saying the group is “overstepping its authority.”

Last fall, the OAK was given more authority over asset allocation and governance concerns. Although Asip was fine with these changes, it warned that the regulator “does not need any further authority” for a fund’s investment decisions.

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