Swiss Market Study on 1e pension plans 2020

While this pension solution hasn’t revolutionised the pension fund scene overnight, our 2019 survey suggested that the new alternative for higher earners was gaining momentum. A year later we’ve once again surveyed 1e providers to find out how this additional pillar of the occupational pension system has evolved in the last year.

• Is the market growing?
• How do providers view future developments?
• How does the choice of assets compare with traditional collective pension funds?
• Are 1e plans delivering on their promise of being a good top-up solution?
• Are providers embracing new client-facing technology?
  
• Are members getting a cost-efficient solution, or are admin expenses eroding benefits?

Previous survey results

• Swiss Market Study on 1e pension plans 2019
  

Tracking developments: PwC's 2020 survey of 1e providers

• The 1e market has been growing significantly: the providers had a total asset volume of CHF 5.0 billion under management (31% growth in 2019) and covered 18,592 members on 1 January 2020 (15% growth). 298 (15% growth, now 2,223 in total) employers set up 1e plans in 2019.

• Market providers expect double-digit growth: providers expect average future growth of around 15% annually for the next five years, with assets under management expected to rise to over CHF 10 billion. This is less optimistic than last year, but they still expect significant growth.

• Less equity, more real estate: after a year which can be considered a good year for equity, 1e plans have a lower equity exposure than in the previous year. 1e plans continue to have higher average allocations of cash and bonds compared with more traditional collective pension funds.
• 1e plans continue to attract buy-ins: 1e plans are still attracting heavy buy-ins, especially when compared with collective pension funds.
  
• Providers are going digital: all except one of the participating providers offer, or are developing, online-based tools to interact with members, and offer a high level of flexibility in terms of plan design.
• Slightly higher general administration costs: while most providers have very competitive administrative costs, the average general administrative costs stated by survey participants are noticeably higher than the average for the entirety of collective pension funds. Higher costs usually reflect the enhanced level of service offered by providers.