Swiss pension funds in international comparison
If a comparison is made between the Swiss pension system and that of other OECD countries, the three-pillar principle also prevails in these countries in a varying form. However, there are significant differences in the relevance of the individual pillars.
In larger countries such as Germany or France, the first pillar, for which the state is responsible, dominates. In countries comparable to Switzerland, such as the Netherlands, on the other hand, the second pillar of pension provision is much more important.
However, Switzerland stands out in this comparison due to a particularly balanced structure of the individual pillars. This is why international organisations such as the World Bank, IMF and OECD as well as ratings such as the Melbourne Mercer Global Pension Index consider it to be the most future-proof concept. At the same time, Switzerland has one of the best capitalised pension systems in the world, giving Swiss economy a clear competitive advantage.
And yet, if a comparison is made of the average asset allocation and the resulting return on investment, it is clear that other pension systems have benefits that Switzerland can learn from. Especially with pension fund assets worth billions of Swiss francs, even small additional returns in percentage terms are very significant in absolute terms. These additional returns are realised in foreign pension systems.
For each individual beneficiary, it is of essential interest that as much return as possible is generated with the accumulated retirement capital at an appropriate level of risk. After all, if more yield is generated, this has positive effects on the pension benefits paid out.
One of the reasons for this Swiss gap is that many pension funds do not exploit the possible risk limits and thus the return potential available with their investment strategies. Counterexamples here are the large pension funds in Canada and the Netherlands, whose share of equities and alternative investments is considerably higher than in Switzerland.
A more diversified investment mix would - with sufficient rationale - in theory also be possible in Switzerland with the existing restrictive investment regulations according to BVV2. However, these limits are hardly ever fully exploited, even by large pension funds. In order to increase their performance, the pension funds would therefore have to change their investment behaviour first and foremost, if they can do so while taking their risk capacity into account.
However, such a change in behaviour does not happen on its own but can only be achieved with a development and professionalization push that improves risk management even at smaller pension funds.