Progress in pension fund initiative: Structured products soon «transparent»?

The latest market data shows that structured products have regained acceptance and continue to be in demand as flexible, liquid and suitable alternatives to low interest rates for every risk profile. Pension funds, in particular, are facing huge challenges when it comes to generating yields. This consequently means the yield crisis is leading to heightened pressure and is imposing greater demands on asset managers – the rigorous deployment of modern investment instruments such as structured products is an ideal way to supplement portfolios and generate yield.

Two-tier approach: Training of pension fund representatives & transparency label for SPs

As the panel discussion at Finanz’18 also suggested, however: very few structured products have been deployed by pension funds to date, despite the fact that more would have been possible in strictly legal terms. Occupational pension investment guidelines (BVV2), for example, essentially permit their use. The problem is simply that the necessary know-how is often lacking amongst the decision-making bodies to make the most of the existing potential in practice. For this reason, the SSPA has launched a transparency and information initiative, and is keen to engage in active dialogue with pension fund managers and public authorities. This aims to highlight the move towards greater transparency & clarification as well as the various potential applications and products, in order to correct misconceptions. For the category «assets with non-transparent costs» in annual reports of pension funds is no longer an accurate description for structured products.

Strengthening the pension system through the use of structured products

Against this backdrop, the SSPA’s pension fund initiative has been making considerable progress – the association is currently engaged in constructive discussions with the OAK, Switzerland’s Federal Supervisory Commission, to find a solution for the problem of cost transparency by mid-2018. After all, the entire sector would like to help strengthen the pension system, in order in close cooperation with pension fund managers to find structured investment solutions for the benefit of all insured persons. In today’s challenging environment, pension funds are more entitled than ever to expect the professional and efficient investment of money that has been entrusted to them – including or in particular when it comes to structured products.

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