Article 111 of the Federal Constitution provides for a three pillar system of old-age, disability and survivor protection consisting of:
Occupational Pension Schemes under The BVV
- Pillar 1: a federal basic insurance scheme and
- Pillar 2: Mandatory occupational plans; and
- Pillar 3: Voluntary provision for old age.
Occupational Pension Schemes come under Pillars 2 and 3 schemes and are classified as:
- BVV2 Occupational Pensions (Vorsorgeeinrichtung); and
- Swiss Investment Foundation (Anlagestiftung)
List of Investment Foundations
A list of investment foundations currently supervised by the OPSC can be found on the OPSC website.
LEGAL STRUCTURES
Investment Foundations
Swiss Investment Foundations are known as Anlagestiftungen. Anlagestiftungen have formed a key part of pensions investment in Switzerland for the last 40 years.
Investment foundations are foundations within the meaning of Art. 53a para.1 of the Federal Act on Occupational Old Age, Survivors’ and Invalidity Pension Provision (BVG/LPP; SR 831.40) and Art. 80 et seq. of the Swiss Civil Code (ZGB/CC; SR 201). These institutions are established specifically to serve occupational pension plans, and are supervised by the Occupational Pension Supervisory Commission (OPSC).
They are tax-exempt collective investment vehicles that were originally dreamt up by the country’s pension funds themselves. Traditionally, they have been chosen by funds that were not big enough to offer segregated mandates and were meant to be tax-efficient pooled funds that would give their founders and co-founders joint say in how they were run.
More recently, compared to investment funds (Anlagefonds), Anlagestiftungen are at a tax disadvantage to investment funds in respect to value-added tax and stamp duty on transactions.
Segregation of Assets
The investment groups are managed as separate accounting entities and are economically independent of each other. In the event of the investment foundation’s bankruptcy, the property and rights belonging to an investment group are segregated in favour of that group’s investors.
THE REGULATOR
Occupational Pension Schemes are regulated by the the Occupational Pension Supervisory Commission (OPSC), also referred to as OAK.
LEGISLATION
The key legislation is the:
BVG – the Federal Act
BVV2 – the Ordinance made pursuant to the Federal Law, key changes were made in 2015
The Fachempfehlung (1996) – which provides for the treatment of derivatives
References to the relevant legislation are confusing because of the official availability of some of the documents in German only and because of the use of numerous slightly different English translations for the naming of the legislation.
Below are links to the relevant legislation and guidelines:
| ENGLISH | GERMAN |
|---|---|
| The BVG Federal Act on Occupational Old Age, Survivors' and Invalidity Pension Provision Not available in English. | Bundesgesetz über die berufliche Alters-, Hinterlassenen- und Invalidenvorsorge (BVG/LPP; SR 831.40) CLICK HERE FOR MORE INFORMATION |
| BVV2 (also referred to as OOB2) The Ordinance on Occupational Old Age, Survivors' and Invalidity Pension Provision Not available in English. Funds-Axis unofficial English translation | Verordnung über die berufliche Alters-, Hinterlassenen- und Invalidenvorsorge (BVV2/ 831.441.1) CLICK HERE FOR MORE INFORMATION |
| Ordinance on Investment Foundations Not available in English. Funds-Axis unofficial English translation | Verordnung über die Anlagestiftungen (ASV/OFP; SR 831.403.2) CLICK HERE FOR MORE INFORMATION |
| Official Commentary on BVV2 changes 2015 - Announcement on occupational pensions No. 138 Not available in English. Funds-Axis unofficial English translation | "BSV – Mitteilung über berufliche Vorsorge Nr. 138" CLICK HERE FOR MORE INFORMATION |
| The Fachempfehlung - 996 – BVV2 - Special recommendation on the use and presentation of derivative financial instruments Not available in English Funds-Axis unofficial English translation | The Fachempfehlung - "Fachempfehlung zum Einsatz und zur Darstellung der derivative Finanzinstrumente" (Fachempfehlung) – 1996 CLICK HERE FOR MORE INFORMATION |
Note: under FinfraG, they are also subject to clearing obligations for their OTC-derivatives trading and be subject to transaction reporting requirements. Click here for more details.
ELIGIBLE INVESTORS
Art. 1 of the Ordinance on Investment Foundations sets out which institutions are authorised to invest in an investment foundation:
Art. 1 Eligible investors:
The following persons are eligible to invest in an investment foundation:
Pension funds and other tax-exempt institutions domiciled in Switzerland whose purpose is to provide occupational benefits; and
Persons who manage collective investment schemes of the institutions referred to under letter a), are supervised by the Swiss Financial Market Supervisory Authority (FINMA) and exclusively invest funds for these institutions with the foundation.
This legal definition of an eligible investor means that investment foundations are not open to natural persons or legal entities which are resident or domiciled abroad. Such entities are also forbidden from exerting a controlling influence on investment foundations in any other way.
BVV2 Investment Rules
The aim of the BVV 2 is to prevent the concentration of risks in single investment classes and to allow international diversification of pension fund investments.
A summary of the investment rules is below:
**CUSTOM TABLE – MICHAEL**
Derivatives
Click here for more details on The Fachempfehlung (1996) and the treatment of derivatives for occupational pension schemes.
BVV2 Amendments
As set out above, the BVV Guidelines has a 15% limit for alternative investments.
The BVV2 Guidelines for foundations and pension funds came into force on January 1, 2015. Whilst that 15% limit doesn’t change, there are important amendments, including in the definition of “Alternative Debt.” The changes made necessitated pension funds and investment foundation to adjust their asset investments by the end of 2014.
Click here for more details of BBV2 and the Amendment made.