Company-owned pension funds under pressure: Why many SMEs will need to make a new decision in 2026

Column by Alain Grand

For a long time, a company-owned pension fund was regarded in Switzerland as an expression of entrepreneurial independence. Those who ran their own pension scheme determined their own investment strategy, pension plans and financing. Particularly among established SMEs, having an in-house pension fund was often part of the corporate culture — associated with the aspiration to assume long-term responsibility for both employees and the company.

But reality has changed. More and more companies are now asking themselves whether this model is still viable under the current framework conditions.

Developments in recent years speak for themselves: since 2013, hundreds of companies have given up their company-owned pension funds and transferred them to a collective or joint pension institution. The reasons for this lie less in a lack of willingness than in the increasing requirements around governance, specialist expertise and risk management.

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

Responsibility is becoming more complex

In 2026, many SMEs will come under additional pressure. The regulatory requirements placed on pension institutions continue to increase. Topics such as transparency, ESG integration, investment risks, cybersecurity and the professional documentation of decision-making processes are now also occupying smaller pension institutions in depth.

At the same time, the board of trustees remains responsible. Anyone who runs a company-owned pension fund not only bears strategic responsibility, but may also be personally liable in the event of breaches of duty.

There is also a structural problem: many smaller pension institutions have limited human resources. When long-standing members of the board of trustees or pension fund managing directors step down, it is becoming increasingly difficult to find suitable successors with sufficient pension and investment expertise.

What could previously be managed with a manageable level of effort now requires specialised expertise in areas such as asset management, actuarial matters and regulatory governance.

Fixed costs are rising faster than membership numbers

The situation is particularly challenging for small and medium-sized pension institutions because of their cost structure.

Many expenses — for example for audits, pension fund experts, regulatory reviews or administration — arise regardless of the number of insured persons. If the number of active insured members falls or the proportion of pensioners increases, the fixed costs per insured person rise noticeably.

Demographic developments add to this. In many traditional SMEs, the age structure has changed significantly in recent years. A higher proportion of pension recipients ties up capital and reduces the financial flexibility of the pension institution.

At that point, at the latest, the strategic question arises: is an independent pension solution still appropriate for the company’s current size, risk capacity and long-term corporate strategy?

Full insurance or a semi-autonomous solution?

In practice, companies today are usually faced with two alternatives: full insurance or a semi-autonomous collective or joint pension institution.

Full insurance offers maximum security. A life insurer assumes both the investment and insurance risks. Underfunding is excluded and benefits are guaranteed. Especially in economically uncertain times, this model remains attractive for security-oriented companies.

By contrast, semi-autonomous solutions have grown significantly in importance in recent years. In this model, risks such as death and disability are typically reinsured, while retirement capital is invested collectively in the capital markets. This creates the potential for higher long-term returns — albeit combined with certain market risks.

For many SMEs, modern collective foundations today offer a decisive advantage: they combine professional governance structures with economies of scale. Administration, compliance, asset management and regulatory requirements are managed centrally, while companies can at the same time retain flexibility in the design of pension plans and financing.

The discussion is changing

Just a few years ago, the focus was often on whether a company-owned pension fund was an expression of particular independence. Today, a different question is coming to the fore: which structure is stable, efficient and responsible in the long term?

In 2026 in particular, it is becoming clear that the requirements placed on pension institutions will continue to become more professional. Digitalisation, regulatory developments and volatile capital markets are increasing the pressure further.

For many SMEs, the issue is therefore no longer primarily autonomy, but the sustainability of the solution — in terms of people, finances and organisation.

This does not mean that company-owned pension funds have fundamentally had their day. Companies with sufficient scale, stable governance and clear resources can continue to operate successfully with their own solution.

However, many other companies are increasingly recognising that modern collective or joint pension institutions now offer solutions that combine professionalism, flexibility and efficiency. The decisive factor is therefore not the tradition of a structure, but its future viability.