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Pensions are falling. But the financial industry skims billions from pension funds every year – at the expense of the insured.
While the pensions for the insured are falling, the pension fund market is a lucrative business: more than seven billion Swiss francs are siphoned off from the pension funds every year. Ascending trend. Research by SRF and “SonntagsBlick” reveals how the system works.
The procedure: Banks, insurance companies and other financial service providers set up pension funds that they look after themselves – and keep increasing the administrative and investment costs. This works in good times and bad. Because a poor performance of the funds only burdens the assets of the insured, but not the profits of the provider.
Politicians have done little so far: the left is focusing on the AHV. And many commoners represent the interests of the PK providers – or are themselves involved in this lucrative business.
PK Pro – an ex-national councilor benefits
Like Reto Wehrli from Schwyz, who was a member of the National Council for the CVP from 2003 to 2011. During this time, together with trustee Hans Düring, he set up a new pension fund – the PK Pro. Today, with 80,000 customers and more than three billion pension capital, it is one of the major players in the pension fund market. It regularly appears in the major rankings – and often ends up in the lower ranks. And yet every year millions of dollars flow into the holding company controlled by Wehrli and Düring. How does this work?
Your pension fund is embedded in a non-transparent holding company called Tellco – the model for more than 50 such umbrella companies that now dominate the Swiss pension fund market. Large insurance companies and certain cantonal banks also operate such structures. Their method: They set up a pension fund and build other companies around it, such as management companies, investment vehicles, brokers and real estate companies.
The administrative offices charge the insured for accounting fees. For the broker there are commissions for referring new customers. The investment vehicles collect money for investing the pension capital. The real estate companies get money for the construction and operation of the properties into which the investment vehicles direct the pension capital. All of this flows together under the umbrella of the holdings and goes to their owners.
According to the annual report, for PF Pro in 2020 this meant CHF 9.3 million for administrative expenses and management alone. The asset management and the custodian collected 38.2 million. At more than 1 percent, the total asset management costs of PK Pro were twice as high as the average. The majority of these and other fees went to Tellco Holding, which is 94 percent owned by Düring and Wehrli, and to companies in which the two have a stake. “This dimension is unique,” says a PK insider about the construct.
The laws are lagging behind developments in the PK market.
In return, PK Pro customers received 1 percent interest on their retirement capital – the legally prescribed minimum. And that in the year of stock market records in 2020. But what is bad for the insured is good for the administrator: Tellco Holding made a profit of 14 million francs this year. The holding denies that it performs poorly in pension fund comparisons. She says: “Tellco PK Pro is in a very good position in terms of administrative costs per capita.” And it guarantees: “For 2021, the insured will receive an interest rate of 2 percent.”
Better supervision required
The PK Pro is not an isolated case – but the rule: in the last decade, a third of company pension funds have disappeared. Three out of four policyholders parked their money with a collective foundation today. The concentration increases rapidly. “The PK market is sometimes a large self-service shop,” says Urs Eicher from the PK network, which represents the interests of employees in the second pillar. “Many insured people finance this without knowing anything about it.” That is why Manfred Hüsler, Director of the Federal Pension Fund Supervision (OAK BV), calls for more powers for supervision: “The laws are lagging behind developments in the pension fund market,” says Hüsler.
We don’t need more regulations, but clearer and performance-related rules.
GLP National Councilor Melanie Mettler has pushed through a postulate that now requires the Federal Council to carry out a comprehensive evaluation of PK supervision. What should come of it? “We need clear rules, more transparency and an effective supervisory body,” says Mettler. Andri Silberschmidt also thinks that the current PK system needs reform. But he also says: “More regulations only lead to new constructs that are not in the interest of the insured. We don’t need more, but clearer and performance-related rules.”
One thing is certain: as long as the politicians do not agree, the financial industry will rub its hands – at the expense of the insured.