The pension fund market is complex, and many businesses lack the experience to answer this question. In many places, premiums for risk benefits and administrative costs have fallen sharply in recent years — and you can take advantage of the savings. A market comparison should be undertaken at regular intervals every three to five years. Now is the perfect time to optimize terms for employers and employees alike. Savings of 20–40% are not uncommon — often without changing providers.
Nearly all businesses can achieve premium reductions of 10–20% with better benefits, and significantly greater cost savings are possible. Naturally premiums aren’t the only criterion, but this is where the differences can be enormous. To take one example, a service business with 62 employees let Towers Watson carry out a market comparison. The offers from different providers varied widely. The most expensive option cost CHF 436,000, the lowest CHF 235,000 — a 46% difference.
Even if you’re happy with your provider and don’t want to switch, a market comparison can still be worthwhile. When you ask for different bids, your existing provider will also make you a new offer, lowering your premiums in response to the competition. Still, before amassing a pile of bids with no clear objective, you should first take a close look at your existing solution. Consider the design of your benefits plan carefully. Do you need more flexibility for employees, letting them choose among three different employee contribution levels? Do you want a solution from a rock-solid insurance company, or would you rather join a collective foundation and pursue higher returns?
A solid basis for your decision
It’s best to set these ground rules before starting a market comparison. Given the complexity of BVG regulations, it makes sense to hire an external advisor. Your advisor knows the market and where to find the right providers and the best terms. You’ll receive a comprehensive report comparing three to five pre-selected offers according to a number of different criteria. All this will give your business and your pension committee a solid foundation on which to make a decision.
The cancellation date for pension plans is every June 30, effective December 31. To complete a market comparison in time to avoid missing the deadline, you should start no later than April. We’ll be glad to advise and support you in analyzing your existing solution, carrying out the market comparison and finding the right provider.