OAK recognises SSPA’s cost-transparency concept for structured products
Swiss pension funds can now invest more easily in structured products
The comprehensive cost-transparency concept presented by the Swiss Structured Products Association (SSPA) fulfils the requirements of the Directive “W-02/2103 Statement of Asset Management Costs” and was approved by the Occupational Pension Supervisory Commission (OPSC) on 21 November 2019. This means a structured product is considered cost-transparent if the agreed cost information is made available to Swiss pension funds. The SSPA welcomes this breakthrough in the transparency discussion with the OPSC. The use of structured products offers pension funds additional opportunities in terms of performance and risk management in connection with the management of Swiss pension assets.
Zurich, 5 December 2019. Structured products were previously regarded by many pension funds as not cost-transparent and therefore unattractive investment products. With its “Guidelines for Calculating and Disclosing the Cost of Structured Products”, the SSPA has been able to meet these concerns and now fulfils the OPSC’s cost criteria for the use of investment products in the occupational pensions field. These guidelines for issuers of structured products will enable pension funds to disclose the cost of structured products in their operating accounts.
Comprehensive cost transparency thanks to daily updates of cost information by issuers
The revised guidelines are based on the calculation and disclosure of product costs pursuant to the European Packaged Retail and Insurance-based Investment Products Regulation (PRIIPs Regulation). This lays down the requirements for the calculation and presentation of the costs of structured products offered to Swiss pension funds. Essentially, a distinction is drawn between the categories of “one-off costs”, “recurring costs” and “ancillary costs”.
Issuers who offer structured product to pension funds undertake to make a current PRIIPS KID available to the pension fund when a structured product is bought. In addition, the issuer provides cost information, updated on a daily basis, on the SSPA website. This can be accessed by the pension fund free of charge. The criteria for the total cost indicator in the basic information document of a structured product and the presentation of the costs on the SSPA website constitute a comprehensive and unique disclosure to investors in structured products.
Structured products increasingly offering solutions to pension funds
Thanks to the recognised cost concept, the SSPA is now expecting the constructive exchange between issuers of structured products and Swiss pension funds to intensify further.
“We thank the OPSC for its constructive support while developing the cost transparency concept. This represents a further milestone in our efforts to improve transparency. The recognised concept enables issuers to meet the needs of pension funds as effectively as possible. In the current low-interest environment, we aim to use structured products to contribute towards long-term investment performance and the protection of Swiss pension assets. At the same time, we are well-aware that we need to keep pension fund managers and consultants better informed about the opportunities and benefits of structured products,” said Markus Pfister, SSPA President.
To guideline on the calculation and disclosure of structured products and explanation: https://www.svsp-verband.ch/en/media/#section-guidelinesDownload PDF