2023-05-09 10:55:30
The financial situation of provident institutions deteriorated sharply in 2022, due to the war and inflation. The Supervisory Commission welcomes the LPP reform, but calls for improved supervision. For-profit corporations are becoming more and more important.
Inflation, sharply rising interest rates, the war in Ukraine and disruptions in supply chains have created a significant degree of uncertainty in the economy. With strong repercussions on the markets, noted Tuesday Vera Kupper Staub, president of the Higher Supervisory Board for Occupational Pensions (CHS PP) during her annual press conference.
The institutions therefore had a difficult year in terms of investments and their financial situation suffered as a result. Their average net performance was -9.2%. The coverage rate of provident institutions fell considerably at the end of 2022. At the end of the year, 16.1% of provident institutions were overdrawn.
Lower pay
The negative average investment performance in the year under review caused the average return on the pension capital of active insured persons to fall from 3.69% at the end of 2021 to 1.9% at the end of 2022.
By way of comparison, the inflation in Switzerland calculated by the Federal Statistical Office was 2.8% in 2022, compared to 0.6% in 2021. This means that in 2022 many active insured persons suffered remuneration real negative impact on their pension assets.
BVG reform
In terms of redistribution, the ratio between expenditure in favor of active insured persons and that in favor of pension recipients is almost balanced. For provident institutions offering the minimum LPP, only the reform of the 2nd pillar adopted in March by Parliament will ensure a level of benefits that can be financed almost without redistribution.
This reform is a positive and important step, which will strengthen the stability of the system, noted Vera Kupper Staub. “It is to be hoped that the reform of the LPP will obtain a majority in the probable popular vote, and that the political blockage of the reforms, which has lasted for several years, will come to an end”. The coverage of part-time workers, provided for in the LPP reform, is long overdue.
Conflicts of interest
However, this will not be enough, according to the Commission. Because unlike other comparable supervisory systems, such as that of the social health insurers, the instruments of the regional supervisory authorities and the CHS PP provided for by the LPP have not been adapted to the changing circumstances of the 2nd pillar.
The ongoing process of concentration in the 2nd pillar has led to the growth of collective and communal institutions and has given rise to an ever-increasing number of for-profit service companies. The gaps in the legislation make it difficult to carry out effective monitoring in the case of complex collective and common institutions confronted with conflicts of interest.
The existing legal control and monitoring system therefore needs to be modernised. Parliament has commissioned an evaluation of the LPP structural reform. This is an important step, welcomed the president.
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