Since 1 January 2006 pension plans may offer their members a choice from among a number of investment strategies. Admittedly, these options are only available outside the compulsory coverage of occupational benefit plans and thus only for that part of salaries currently in excess of CHF 126,900. These benefit plans are often called “1e plans”, in reference to the provision of the corresponding regulation, Article 1e BVV 2 [Occupational Pension Plan Regulation 2]. 1e plans must have separate pension benefit coverage exclusively for that part of a salary in excess of CHF 126,900.
For employees, these plans offer the possibility of defining the investment strategy for their retirement savings according to their own judgement, within certain limits, and of contributing on that basis. This clearly heightens employee participation and personal responsibility. It can also help avoid cross-subsidising pensioners as a result of low returns on retirement savings.
Basically, under 1e plans employers can transfer investment risk onto their employees. This reduces both pension fund contributions and the associated risks.
After private home ownership, retirement savings are the main assets for most employees in Switzerland. In any case, many participants do not know exactly what the monetary arrangements are, so the structure is akin to a black box. But even where the investment structure is wholly transparent, participants have no say in the investment strategy and hence in the risks taken. The introduction of 1e arrangements marks a clear change in this situation. The risk, and along with it the long-term prospects for investment success, can be decided personally, within certain limits.
Your Wealth at a Glance.