Pension capital as investor

The weight of the second pillar

No client group shapes the Swiss asset management industry as much as the occupational pension funds. Part E of this book describes the three-pillar system, the Federal Act on Occupational Retirement, Survivors’ and Disability Pension Plans (BVG) of 1982, in force since 1985, and the rejected reform of 2024. The present section looks at the pension funds only in their role as investors. According to the Federal Statistical Office, the balance sheet total of Swiss pension funds reached CHF 1,220.6 billion at the end of 2024. The number of pension institutions had fallen to 1,292, of which 65 were governed by public law and 1,227 by private law. Equities accounted for 31.6 per cent of assets, bonds for 26.9 per cent and real estate for 21.9 per cent. The funds achieved a net investment result of CHF 83.7 billion in 2024, and the aggregate underfunding fell to CHF 31.5 billion.¹

These figures explain the domestic orientation of Swiss asset management. Pension capital amounts to about a third of the assets managed in Switzerland, and a large part of it is invested through Swiss managers, Swiss funds and Swiss investment foundations. The pension funds’ preference for Swiss real estate, Swiss bonds and Swiss equities, even after decades of international diversification, supports a domestic fund market that would otherwise be much smaller. The concentration of the pension sector, whose number of institutions has fallen sharply over two decades, has at the same time increased the bargaining power of the remaining large funds and collective foundations. They negotiate fees with the asset managers and increasingly manage parts of their portfolios internally.

The investment rules of BVV 2

The investment of pension assets is governed by Articles 49 to 58 of the Ordinance on Occupational Retirement, Survivors’ and Disability Pension Plans (BVV 2). The ordinance combines a general duty of care, security and diversification with quantitative limits for individual categories. Alternative investments may not exceed 15 per cent of total assets. A separate category for infrastructure with a limit of 10 per cent was created with effect from 1 October 2020. Since early 2022 a further category has allowed investments in unlisted Swiss companies up to 5 per cent. Under Article 50 para. 4 BVV 2 a pension fund may exceed the limits if its investment regulations allow it and it demonstrates, with qualified justification, that the safety and diversification of its assets remain ensured.² The limits for equities, real estate and foreign currency exposure complete the catalogue.³

The limits have a direct effect on the asset management industry. Alternative investments, which include hedge funds, private equity, insurance-linked securities and commodities, must as a rule be held through diversified collective vehicles. This rule creates demand for funds of funds, investment foundations and pooled vehicles such as the L-QIF. Pension funds have in practice used far less of their quotas than the law permits. A study by UBS found that average allocations to alternative investments never exceeded 10 per cent over a period of seventeen years, although the combined allowance for alternative, infrastructure and unlisted Swiss investments amounted to 30 per cent. Political initiatives to channel more pension capital into Swiss start-ups and infrastructure have therefore focused less on the limits themselves and more on the incentives and governance of pension funds.

The Federal Council continues to adjust the ordinance in small steps. On 1 September 2026 it decided, among other things, to allow pension funds to use strictly regulated repurchase transactions in order to hedge foreign currency risks for short periods.⁴ Such changes are technical, but they illustrate how closely the investment practice of the pension sector depends on the text of an ordinance that the executive can amend without a vote of Parliament.

Investment foundations

A peculiarly Swiss instrument serves the pooled investment of pension capital: the investment foundation (Anlagestiftung). Investment foundations are foundations under Swiss law whose purpose is the joint investment and management of pension assets. Only tax-exempt pension institutions may invest in them. Their legal basis lies in Articles 53g to 53k BVG and in the Ordinance on Investment Foundations (ASV), which entered into force on 1 January 2012. They are supervised by the Occupational Pensions Supervisory Commission (Oberaufsichtskommission Berufliche Vorsorge, OAK BV), which examines their statutes, regulations and annual reports.⁵ The Federal Department of Home Affairs consulted on amendments to the ordinance in 2018, after several years of practice had revealed a limited need for revision.⁶

Investment foundations compete directly with funds. They offer pension funds a vehicle that is exempt from FINMA approval and from the withholding tax complications of Swiss funds, and they are tailored to the rules of BVV 2. Many of the large Zurich asset managers and insurers run their own investment foundations. The Swisscanto investment foundation, set up by the cantonal banks in 1973, is one of the older examples. For real estate and private markets in particular, investment foundations have become the preferred Swiss vehicle for pension capital. This partly explains why the L-QIF has spread only slowly.

Asset managers for pension funds

Pension funds may entrust the investment of their assets only to persons and institutions that meet the requirements of the pension legislation. A FINMA licence is the usual way of meeting those requirements. The licence of a manager of collective assets therefore carries particular weight for firms that want to serve the Swiss pension market. As described above, the de minimis rules allow smaller firms to manage pension assets up to CHF 100 million under the portfolio manager regime.⁷ The combination of pension rules and FinIA thus creates a regulated market that favours established Swiss institutions. Foreign managers can serve Swiss pension funds through Swiss subsidiaries or through licensed Swiss partners.

Notes

Federal Department of Home Affairs / Federal Statistical Office, “Berufliche Vorsorge: Anstieg der Bilanzsumme, Reduktion der Unterdeckung – Pensionskassenstatistik 2024: Definitive Ergebnisse und Kennzahlen” (21 January 2026), on the balance sheet total of CHF 1,220.6 billion, the 1,292 pension institutions, the asset allocation, the net investment result of CHF 83.7 billion and the reduction of underfunding to CHF 31.5 billion, https://www.edi.admin.ch/de/newnsb/hhiHzDsYS69dBD6sQpGmH. ↩
Sven Ebeling (UBS), “Sind die BVV-2-Anlagerichtlinien ein Auslaufmodell?” (17 March 2023), on the limit of 15 per cent for alternative investments, the infrastructure category of 10 per cent added in October 2020, the category of 5 per cent for unlisted Swiss investments added in early 2022, the possibility of exceeding the limits under Article 50 para. 4 BVV 2 with qualified justification, and the observation that average allocations to alternative investments remained below 10 per cent over 17 years, https://www.ubs.com/microsites/focus/de/markets/2023/are-the-bvv2-investment-guidelines-becoming-obsolete.html. ↩
Art. 55 BVV 2 (SR 831.441.1), bilingual edition, https://www.droit-bilingue.ch/de-fr/8/83/831.441.1-55-109.html. The article sets limits of 50 per cent for Swiss mortgage-backed securities, 50 per cent for equities, 30 per cent for real estate, of which at most a third abroad, 15 per cent for alternative investments, 30 per cent for unhedged foreign currency exposure and 10 per cent for infrastructure. ↩
Vorsorgeforum, “Bundesrat passt BVV 2 und BVV 3 an” (1 September 2026), on the decision of the Federal Council to allow pension funds strictly regulated repo transactions for short-term currency hedging, the treatment of the 13th AHV pension in the overinsurance calculation and the changes to pillar 3a beneficiary rules from 2027, https://www.vorsorgeforum.ch/bvg-aktuell/2026/9/1/bundesrat-passt-bvv-2-und-bvv-3-an.html. ↩
Occupational Pensions Supervisory Commission (OAK BV), “Anlagestiftungen”, on the legal basis in Articles 53g–53k BVG and the Ordinance on Investment Foundations (SR 831.403.2), the purpose of joint investment and management of pension assets, the supervision of statutes, regulations and annual reports and the list of supervised investment foundations updated on 1 June 2026, https://www.oak-bv.admin.ch/de/beaufsichtigte/anlagestiftungen. ↩
Demokratis, “Änderung der Verordnung über die Anlagestiftungen (ASV)”, on the consultation from 14 September to 14 December 2018 prepared with the Conference of Managers of Investment Foundations (KGAST) and the OAK BV, and the entry into force of the ordinance on 1 January 2012, https://www.demokratis.ch/vernehmlassung/bund/aenderung-der-verordnung-ueber-die-anlagestiftungen-asv_bpxjvzd3. ↩
FINMA, “Managers of collective assets”, on the requirement of a licence for the management of occupational pension assets and the de minimis threshold for pension assets, https://www.finma.ch/en/authorisation/asset-management/asset-managers-of-collective-investment-schemes/. ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of September 2025.

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Dr Alexander Ressos, TEP

Rechtsanwalt/Attorney-at-Law

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