SWITZERLAND - The Swiss government has passed new investment regulations for Pensionskassen which put more emphasis on the prudent person principle and the responsibility of heads of Pensionskassen but which also lower the investment limits on assets such as real estate.
The prudent investor principle has been in place for a while but more of the processes demanded by trustees and CEOs have now been written into law, confirmed Joseph Steiger from the department for occupational retirement provision at the Swiss social ministry.
"This is already in place at a lot of Pensionskassen," he added.
However, one of the most one of the most pronounced changes is the investment limits for possible real estate investments has been lowered from 50% domestic and 5% overseas to 30% in total.
"The idea was to reduce the current weight of real estate investments which were perceived as too high by all parties involved," said Steiger.
He stressed industry representatives had been part of the revision "at all times" and "they did not see any problems" with the lower real estate investment rate.
The Swiss government decided against scrapping all limits completely as this "might have sent the wrong signal" and because "the limits are still a point of orientation" for many trustees.
Christoph Ryter, president of the Swiss pension fund association ASIP, agreed "most funds will not really be affected by the changes" proposed, and noted alternative asset classes have now become part of the regular asset categories rather than being specialist investment vehicles.
In total, the number of investment limits to be obeyed has been reduced from 19 to 12, and included a cut on the limit to equity investments from 30% domestic and 25% overseas to 50% in total.
That said, funds could still surpass the legal limits if they give good reasons in their annual accounts, according to Steiger.
Experts as well as the Pensionskassen federation ASIP had long demanded an overhaul of the regulations.