Pension fund with Individual Choice of Investment Strategy
The individual solution or Individual Choice of Investment Strategy solution is intended for companies wishing to offer their executives an extra-mandatory occupational benefits plan that leaves each of them the freedom to manage their own investments within a defined framework in accordance with the laws.
In addition, for the companies under the international accounting standards IFRS/USGAAP, the Individual Choice of Investment Strategy solution provides an effective way to reduce their balance sheet commitments, while offering their executives an attractive benefits package adapted to their risk profile.
The FCT is delighted to announce the creation in 2018 of its sister company, the FCT 1e ! As a pioneer in the field of plans with individual choice of investment strategy (“plans 1e”), the FCT proposes this solution to its clients since many years and is now willing to further enhance its positioning in this sector by creating a new foundation fully dedicated to this type of plans. This decision also complies with the will of the legislator to segregate the plans with individual choice of investment strategy from the rest of the system as from 1st January 2020.
Structure and organisation
Every affiliated company constitutes a group of members within the FCT. Each Pension Fund has its own Pension Committee. This body is not necessarily a joint Committee but includes at least one representative of the employer. The Pension Committee of each Fund is responsible for the matters related to:
- its pension plan(s)
- its reinsurer (the Foundation also offers an insurance at an attractive collective rate)
- its custodian(s)
- its investment adviser (optional)
- its investment strategy
- its asset manager(s)
Each insured member of the Pension Fund chooses its individual investment strategy among the various investment strategies offered by the Pension Committee, in compliance with legal regulations.
The Pension Committee selects the custodian banks and the asset managers among the pool of partners approved by FCT. FCT offers as well various pooled investment profiles developed with selected banking partners.
The choice of investments and the partners (custodian banks and asset managers) in charge of their implementation must be monitored on a regular basis in accordance with the Foundation Investments Rules.
Each insured member can change its investment strategy on a monthly basis though the interactive, secured online communication platform Employee Benefits Center (EBC).
He shall declare that he has read the available information and that he understands and accepts the respective risks and opportunities related to its individual choice of the investment strategy.
The insured member shall further declare that he has verified that the investments made do indeed correspond to the strategy he has chosen.
Investment fluctuation reserve
No investment fluctuation reserves are required considering the particularities of the Pension Funds with Individual Choice of the Investment Profile.
The insured member bears the investment risk related to his choice of the investment profile (an investment profile with capital preservation as a default strategy) and accepts that his individual savings account will be influenced by the net performance, both positive and negative. Death and disability risk must be reinsured. The funded status of the individual savings accounts and the Pension Fund is therefore always 100%.
Individual Pension Fund with the individual investment strategy is a supplementary occupational benefits insurance option complementary to the base benefits solution with the following elements determined by its Pension Committee:
- savings plan
- risk benefits
- financing 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.
As a rule, retirement benefits are paid as a lump sum. Pension Committee may also consider the retirement pension to be bought back from the death and disability risk insurer.
Each Pension Committee shall choose a congruent reinsurance covering the death and disability benefits, either through one of the collective contracts negotiated by FCT, or through an individual contract with one of the Swiss insurer supervised by FINMA.