Company-owned pension fund: Still appropriate for SMEs?

The company-owned pension fund was long regarded as an expression of entrepreneurial independence. Today, however, many SMEs are asking a different question: is this model still viable under current conditions?

A recent expert article in Handelszeitung by Alain Grand, Specialist manager in Pension solutions at Tellco, shows why more and more companies are strategically re-evaluating their existing solution. 

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

A model in transition

The figures speak for themselves: since 2013, over 600 companies have abandoned their own pension scheme. The reasons are varied and often structural in nature.

Increasing regulatory requirements, stricter governance standards and higher expectations regarding transparency and documentation mean that operating a company-owned pension fund has become significantly more complex. At the same time, responsibility remains with the board of trustees – including personal liability.

Rising complexity, declining efficiency

The challenge is further intensified, particularly for smaller portfolios:

• Fixed costs are spread across fewer insured members

• Costs per capita increase

• Age structures increasingly affect risk capacity

In addition, expertise in asset management, actuarial matters and regulation is becoming ever more important, while at the same time more difficult to cover internally.

A fundamental strategic question

As a result, the discussion is shifting away from pure tradition towards a strategic consideration: can the company sustain this responsibility in the long term – in terms of personnel, expertise and finances? Or do collective solutions such as collective or multi-employer foundations offer a more stable and efficient alternative?

The decision affects not only the pension solution itself, but also the company’s long-term positioning.

You can find more insights and background information in the full expert article in Handelszeitung.

From analysis to implementation – our guide supports you throughout the decision-making process: Dissolve the company pension fund | Tellco pk