The development of Swiss 1e plans was lent wings by a 2017 change in the law. A growing range of third-party providers can offer employees a choice of investment strategies for their retirement assets.
Building on our 2020 survey, once again we asked the largest providers of Swiss 1e pension funds about their offerings and future expectations for the market.
Key findings
The 1e market is expected to be worth more than CHF 10 billion in five years’ time
The survey participants had a total asset volume of CHF 5.8 billion at year-end 2020. The multi-employer funds included 2,403 affiliated companies, covering 13,838 members. Company 1e funds covered an additional 17,154 members, making 30,992 in total. Multi-employer providers expect future growth of 17% per annum for the next five years, which would grow the assets in 1e pension funds to CHF 10 billion+ by 2026.
Many choose a low-risk investment strategy, which can lead to negative returns
A significant number of insured members have chosen the low-risk investment strategy on offer despite the fact these strategies almost exclusively lead to negative returns in the current market. This suggests that individuals are still becoming familiar with 1e plans, not exercising investment choices and potentially not fully considering the long term risk vs. opportunities.
Less real estate, more cash and bonds
1e funds continue to have higher average allocations of cash and bonds and a lower share in real estate compared with more traditional collective pension funds.
1e plans attractive for buy-ins
Compared to regular contributions, buy-ins to 1e plans continue to be significantly higher than in traditional pension funds.
Digitalisation widespread but with room for development
Almost all participating pension funds now offer online-based tools to interact with members, but the level of functionality varies.
General administrative costs are slightly higher than in traditional pension funds
The average general administrative costs are slightly higher compared to the overall collective and company pension funds. The variety in costs per member reflects the different stages of the 1e funds in maturity and size as well as the enhanced service offering compared to traditional funds.
Download the 2021 survey of 1e providers
https://pages.pwc.ch/core-asset-page?asset_id=7014L0000002r9sQAA&embed=true&lang=en
