Pension Fund with Individual Choice of Investment Strategy

ico-solution-3The Pension Fund with Individual Choice of Investment Strategy solution is designed for companies seeking an extra-mandatory benefits plan for senior management which gives them freedom to manage their investments within a defined LPP/BVG compliant framework. Moreover, this solution offers companies which are under international accounting standards (IFRS/USGAAP) an effective way to reduce their liabilities while offering their senior management attractive benefits adapted to the individual’s risk profile.

Structure and organisation

Each affiliated company forms a Pension Fund within the Collective Foundation Trianon. Each Pension Fund has its own Pension Committee, which does not necessarily have to be composed of an equal number of employer-employee representatives. It does, however, have to have at least one employer representative. The Pension Committee chooses its:

  • pension plan(s)
  • reinsurer (collective contracts available)
  • custodian(s)
  • investment adviser (optional)
  • investment strategy
  • asset manager(s)

Asset management

The assets of each member are managed in accordance with his or her investment profile chosen from the investment universe offered by the Pension Committee; these profiles must comply with statutory requirements. The Pension Committee entrusts management of the investment profiles to specialised partners (custodian and managers) approved by Collective Foundation Trianon. The Foundation also offers collective investment profiles developed with some of its partners.
The investment universe and the partners responsible for its implementation (custodian and managers) must be regularly supervised in accordance with the provisions of the Foundation’s investment rules. The member can change his or her investment profile monthly via the Employee Benefits Center (EBC) internet platform. All members must confirm that they undertake to carefully read the information documents they receive, and that they understand and accept the risks and opportunities related to the choice of their investment strategy. They must also confirm that they will choose their individual investment strategy within 60 days, and will verify within 20 days of the monthly performance report that the investments made by the administrator correspond to their chosen strategy.

Investment fluctuation reserve

Considering the particularities of the Funds with Individual Choice of Investment Profile, no investment fluctuation reserve is required.

Funded status

The member bears the investment risk associated with the chosen investment profile (default investment profile => capital preservation) and accepts that his or her individual savings account will be influenced by the net performance, which could be negative as well as positive. Death and disability risk must be reinsured. The individual savings accounts and the Pension Fund are therefore always at 100% funded status.

Pension plan

The Pension Fund with Individual Choice of Strategy is an individual savings solution that supplements a “basic” benefits plan. Its Pension Committee designs the Fund’s supplemental benefits plan or plans by choosing the:

  • savings plan
  • risk benefits
  • funding method

Interest rates on savings accounts

The interest rate on savings accounts corresponds to the actual net performance (positive or negative) of the investment profile chosen by each member.

Conversion rate

As a rule, retirement benefits are paid as a lump sum. The Pension Committee may also provide for retirement pensions to be bought back from the reinsurer of its death and disability risks.

Reinsurance

Each Pension Committee must obtain matching reinsurance cover for death and disability risk, either through one of the collective contracts negotiated by Collective Foundation Trianon, or through an individual contract with a Swiss insurer approved by the Foundation.