The rise of collective pension schemes is reshaping Switzerland’s second-pillar landscape, but some stakeholders warn that growing individualisation risks undermining the solidarity principle at the heart of the system.

At this year’s Fachmesse 2. Säule – the key industry fair and conference for Switzerland’s occupational pensions sector – one message resonated: Swiss Pensionskassen must evolve without relying on legislative reform. Following the rejection of proposed technical amendments in a public vote this March, market-led innovations are accelerating.

Well-funded schemes, often supported by employer contributions exceeding statutory minimums, are increasingly lowering their conversion rates – the ‘Umwandlungssatz’ used to determine pension payouts from accrued capital. This approach, permissible under certain conditions, helps ensure that pension pots last longer, reducing the need to subsidise retirees with assets from active members.

Meanwhile, the consolidation trend among smaller schemes continues. Regulatory complexity and demographic challenges are driving many to join collective pension vehicles.

The number of Swiss Pensionskassen has fallen dramatically – from around 4,000 in the 1990s to just over 1,300 today. Nearly three-quarters of active scheme members now belong to a collective arrangement.

A shift towards personalisation

For Thomas Schönbächler, chief executive officer of the CHF43bn (€45.8nm) BVK Pensionskasse, the shift is more than structural. BVK should be approaching ‘savings funds’ rather than pension funds, he said, noting that the accumulation phase far exceeds the duration of retirement for most members.

BVK is among the schemes offering members an increasingly tailored experience, with options such as additional top-up payments, front-loaded pensions that taper off, and guaranteed payouts to beneficiaries upon death.

This flexibility is attracting new members and may also help mitigate the growing trend of retirees opting for lump-sum withdrawals – a practice partly driven by the legal constraints around staggered disbursements. Pension funds with sufficient capital, including BVK, are now offering variable pension payouts as an alternative.

Concerns over solidarity

But the move towards individualisation is drawing criticism. Eliane Albisser, head of PK-Netz, an association representing employee interests in Pensionskassen, warned that the collective spirit gets lost.

She argued that pensions were conceived as solidarity-based systems rather than personalised savings plans.

Albisser also expressed concern that some collective schemes are selecting only those pension funds with favourable demographics – namely, more active members than retirees – further eroding the principle of mutual support.

The shift is also creating a two-tier system. According to Laetitia Raboud, director at the Oberaufsichtskommission (OAK), Switzerland’s top pensions supervisory authority, around 10% of schemes operate with only the statutory minimum contributions.

These funds lack the capacity to offer tailored options or to adjust conversion rates. “I worry about those plans,” Raboud told IPE. “For them, it’s actually a blessing when retirees opt for a lump sum, and not expect to be paid a lifelong pension.”

The Swiss second pillar is undoubtedly evolving – but whether it can preserve its foundational ethos of solidarity amid growing personalisation remains an open question.

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