All Swiss pension funds must manage their assets so as to ensure (i) the security of the investment, (ii) an adequate return on invest and (iii) sufficient liquidity to fulfil their obligations towards the beneficiaries.
Therefore the Swiss legislature defines permitted investments and specific limitations on those investments.
Permitted investments include debt securities and other claims with a face value, real estate and related investments, shares, and claims against investment funds or investment foundations that invest in any of these assets.
Furthermore, there are specific limits per category of investment. Regarding the overall exposure of a pension fund in foreign currencies the Swiss legislator determines a maximum value of 30% of the pension fund's assets.
If we take into consideration that two thirds of Swiss trade is conducted with the euroland, a continuous substitution of the Swiss franc by the euro in relevant financial and business transactions is feasable.
Therefore one might raise the question of how far the euro can be considered as "normal" foreign currency in Switzerland. Regardless of these economical facts, the Swiss Federal Office of Social Security, the authority responsible for the enactment of these investment guidelines, determines that the euro is treated like any other foreign currency. By implication, a deviation from the above mentioned limits is only possible if it can be justified by particular circumstances and the investment does not endanger the sustainable overall asset management strategy of the pension fund.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
