May 18, 2018

The Swiss Financial Market Supervisory Authority FINMA is consulting on the proposal to revise and simplify its supervisory practice in relation to the pricing of occupational pension funds. FINMA is merging two circulars about the pricing of occupational pension funds, while refining and streamlining the provisions. The consultation will run until July 13, 2018.

As a result of the changes, insurance companies will be granted more freedom for pricing and the discount policy will be harmonized. The main changes concern the removal of limitations or the ratio between the highest and lowest premium for experience pricing. Additionally, discounts should only be applied strictly if they are actuarially justified. This means an alignment with the practice followed by supplementary health insurance, which is based on the same regulations. The changes focus on the technical premium, which is characterized solely by underwriting features. In the process, the overall degree of freedom for pricing is significantly increased. Some of the previous provisions were outdated; however, FINMA had delayed its review due to the rejection of the 2020 Pension Reform. The merged circulars are 2008/12 titled "Revolving door principle – occupational pension funds" and 2008/13 titled "Pricing risk insurance – occupational pension funds."

 

Related Link: Press Release and Revised Circular

Comment Due Date: July 13, 2018

Keywords: Europe, Switzerland, Insurance, Occupational Pensions, Pension Fund Pricing, FINMA

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