An attractive top-up pension solution gains further momentum

Swiss Market Study on 1e pension plans 2023

Report
17/07/23

Building on our past surveys, we again asked the largest providers of Swiss 1e pension funds about their offerings and future expectations for the market.

In our 2023 survey, we provide insights on the current offerings of 1e providers and how the market has developed since the legislative changes in 2017. We also provide guidance on what employers should be considering when thinking about introducing a 1e plan.

Interested to know more? Download the 5th edition of our annual 1e Market Study.

Download the 2023 report

Our previous studies

Key findings

1e remains attractive – Plans continue to interest employers and employees

19% increase in the number of affiliated employers in multi-employer funds.
Small rise in average size per employer from 5.3 to 6.1 for multi-employer funds.
Significant “buy-ins” by members shows confidence in these plans as investment vehicles.
Assets in multi-employer funds grew by 17% in 2022 despite negative asset return.

Providers are confident – Multi-employer funds expect continued growth over the next five years

Assets in all funds surveyed now total CHF 8 billion at the end of 2022.
Multi-employer funds expect annual growth of 21% and CHF 14 billion in assets by 2028.
Providers continue to invest heavily in digital solutions.

Tough year for returns – 2022 was a test for 1e plans with overall negative returns offsetting 2021 gains

All funds experienced negative average asset returns in 2022, offsetting positive gains in 2021.
Negative returns directly hit individual savings accounts in 1e plans.
Individuals in 1e plans directly experience the upside and downside of investments markets rather than being “protected” through the collective principle.

Falling costs – Administration costs are falling

Average admin costs reduced by 8% for multi-employer funds and 12% for company-owned funds.
The fall was despite higher inflation which saw traditional pension fund costs increase.
This suggests funds are becoming more efficient with economies of scale and competition kicking in.

ESG in focus – ESG factors continue to be a focus area for 1e providers

Sustainable investment and ESG factors have become a key priority for the majority of pension fund providers.
15 out of 20 funds surveyed have integrated ESG factors into their investment strategies.

Risk averse members? – Limited evidence of members seeking higher returns

Asset strategies show slightly lower risks being taken by individuals of company-owned 1e pension funds than the average traditional Swiss pension fund.
Overall strategies of multi-employer 1e funds are broadly aligned to the average pension fund but with no evidence of members seeking higher returns.
A need for further investment in employee communication might be needed.