Collective Foundations in Focus: Greater Efficiency for the 2nd Pillar

Occupational pensions in Switzerland face major challenges: increasing regulatory pressure, ongoing digitalisation, and the demand for greater cost efficiency pose challenges for companies as well as pension fund boards.

But which model is sustainable for the future? Between company-owned pension funds, traditional full insurers and collective foundations, it is important to take a closer look. Collective foundations in particular are gaining increasing importance in the Swiss pension landscape – and for good reason.

In the current guest article at Willis Towers Watson (WTW), Alain Grand, Specialist Manager in Pension Solutions at Tellco, highlights the advantages of collective foundations and provides practical insights.

In the picture: Alain Grand, Specialist manager in Pension solutions at Tellco

Why Collective Foundations Are Gaining Relevance

Company-owned pension funds do offer independence and room for flexibility, but are increasingly under pressure: rising regulatory requirements, higher expectations regarding transparency and governance, as well as the necessity to invest in modern systems for data processing, data protection and reporting. These factors often disproportionately burden smaller funds and increase liability risks for pension fund boards.

Collective and joint institutions address this issue. They leverage their size to achieve economies of scale, have professional structures, and can implement investments in digital processes and central IT infrastructures more efficiently. At the same time, they provide access to expertise in dealing with regulatory requirements, thereby enabling solutions that are not only cost-efficient but also future-proof and legally robust. 

Efficiency Potentials at a Glance

In conversation with Alain Grand, it becomes clear where collective foundations can play to their strengths:

• Lower costs and greater planning security thanks to economies of scale
  Fixed costs are spread across a large number of affiliated companies – this relieves corporate budgets and creates planning security.

• A middle ground between efficiency & proximity
  Collective foundations are large enough to benefit from economies of scale, yet small enough to allow for short decision-making paths and participation in important matters.

• Digital & transparent
  Modern platforms streamline administration and make processes faster, less error-prone and more efficient.

• Expertise within the collective foundation for special requirements
  Flexible, legally sound models are developed by specialists and also meet industry-specific needs.

• Case management for stable premiums
  Early support in the event of illness or accident reduces absences, lowers costs and increases the stability of premiums.

Find out more in the full guest article by Alain Grand at WTW.