The Swiss economy is to a large extent shaped by small and medium-sized companies. Having grown over many years, they often have their own pension funds – a tradition that is deeply rooted in the national culture. These pension institutions have performed well for a long time. But they are now coming under increased pressure: new compliance rules require more collateral to be provided, volatile financial markets make it more and more complex to successfully invest retirement assets, demographic change is altering the ratio of those in active employment to pension beneficiaries, and foundation boards are facing increased scrutiny from the media and employees. This means that the costs for companies with under 300 employees to maintain their own pension funds is barely sustainable. This point is underlined by the consolidation we have seen in recent years.
As a result, more and more company pension funds are being affiliated and merged with large providers. This means, on the one hand, that responsibility can be passed to the larger provider, but on the other hand, taking this emotionally difficult step also means losing influence. Many companies are struggling with this. Previously, there have been no real alternatives. However, this could change with the interesting approach adopted by Tellco Ltd. This general provider of occupational pensions, which is supervised by the Swiss Financial Market Supervisory Authority (FINMA) as a securities dealer, offers a solution that involves becoming an affiliate of the Tellco Pensinvest collective foundation. “With us, the pension plan remains in your name. However, the previous members of the foundation board can relinquish some of their responsibilities,” explains Alexander Spillmann from Tellco Ltd. Employers benefit from the administrative support they receive from the Tellco experts, and they remain free to choose their custodian bank, asset manager and investment strategy.
Proof that this approach works can be found in the example of a medium-sized Swiss company which turned to Tellco before dissolving its own pension fund. Tellco transferred the company’s pension fund into its Tellco Pensinvest collective foundation, its pension fund experts helped pension beneficiaries buy into a third-party foundation, and it initiated restructuring measures. “To finance the pensioner portfolio, we brokered the sale of a real estate portfolio belonging to the company to an investment foundation,” explains Alexander Spillmann, “complete with a buy-back option.” This is possible because Tellco offers services in three different areas, which complement each other: asset management, real estate investments and pension fund administration. The interfaces between these three areas allow it to provide efficient solutions from a single source: “It’s a unique offering in Switzerland, something that is only available from Tellco,” remarks Alexander Spillmann. This SME’s occupational pension scheme is once again on a healthy footing, and the financial future of the employees is in good hands. They continue to determine how their assets are invested, but pay much lower administration costs than before. A promising solution for the future.