Pensions boss faces tough challenges

Marco Netzer has a high responsibility job swissinfo.ch

Marco Netzer, chairman of Switzerland's pension and disability insurance funds, tells swissinfo he will have to deal with some thorny problems in his new position.

Netzer, who started on January 1, has to contend with the economic impact of the United States subprime mortgage crisis as well as the repercussions of an ageing society.

Before this job, Netzer worked in the banking industry; he is now managing assets worth
SFr27 billion ($26.7 billion).

The pensions issue is due to be discussed in parliament this week.

swissinfo: Why did you accept a job which entails such a heavy responsibility?

Marco Netzer: For two reasons: my social commitment, which has always been part of my activities, and my general and personal interest in the topic as a banking sector professional. The asset management aspects and the complexity of the mandate fascinated me.

swissinfo: What are the origins of your social commitment?

M. N. : I don’t think that a professional would be prepared to take on this burden, which in itself does not offer any particular economic advantages, if he or she did not have an interest in the social sector. I am on the boards of charitable and aid organisations. My social commitment is an integral part of my DNA and upbringing.

swissinfo: What added value do you bring as an Italian-speaking Swiss with international experience?

M. N. : At my first board meeting I underlined how I, in a small way, represented the whole of Switzerland. My origins are in Graubünden, my character and culture are from Italian-speaking Switzerland where I grew up. I was born in [German-speaking] Lucerne, now live in [Italian-speaking] Lugano and head a bank which is based in [French-speaking] Geneva.

I believe that my international experience, knowledge of financial markets, and languages allow me to give added value – whether it be in asset management or in bringing together different interests, including the political and cultural aspects in play.

swissinfo: The funds deal with bonds, property and shares. How much have they been affected by the US subprime crisis?

M. N. : Certainly in an indirect way, in that a correction of the financial markets followed the property crisis. This also influenced the valuation of our portfolio. In particular, the second half of 2007 was negative for equities.

swissinfo: Are you satisfied with the result for 2007 for the funds?

M. N. : 2007 finished with a result that was slightly higher than the break-even point. Certainly a disappointing result compared with previous years, but not a negative one.

swissinfo: Demographic change is a challenge for financing social security. How can pensions in future be guaranteed?

M. N. : This problem is the task of legislators. From a purely technical point of view, there are three choices: raise contributions, reduce benefits or increase the retirement age.

No other technical solutions exist for maintaining pension levels. If no measures are taken, the amount of compensation funds will decrease. This is due to the [reversing] age pyramid structure of our country, which is going to have negative repercussions on the balance between the working population and retired people.

swissinfo: What are the prospects over the next years?

M. N. : It’s important to differentiate here. On the one hand, there is the one [important] insurance result, which corresponds to the difference between what is paid in and what is paid out.

On the other, there are the profits from investments. This reflects the mandate we have and what the compensation funds deal with. Investments are carried out in the long-term rather than short-term. Beyond the current turbulence on the financial markets, the perspectives for the funds in asset management terms remain fundamentally positive.

In the past five years the funds have managed an average yield derived from its asset management of 6.2 per cent a year. This is a very positive result which reflects the composition of the long-term portfolio. This and the ability to manage the assets in changing circumstances should guarantee a positive result in the coming years as well.

swissinfo: The pension age is being debated in Switzerland. How can you reconcile this with the financing of the pension and disability funds?

M. N. : The right to a pensions is certainly unquestioned. Since 1948 the situation has however changed: an increase in life expectancy and an improvement of the social and health systems are a fact of life which now allow people to enjoy retirement longer.

If we don’t manage to increase the income (contributions, taxes or other funds), and we don’t want to reduce benefits, the only remaining option is increasing the retirement age.

swissinfo, Andrea Arcidiacono in Lugano

Marco Netzer

The government appointed Netzer as chairman of the pension and disability compensation funds from 2008-11. Aged 52, Netzer is also chairman of the private Banque Cramer, which has its headquarters in Geneva and a branch in Lugano.

The Swiss is married and the father of two children. He speaks Italian, German, French and English.

He studied law at Zurich University before moving into the banking sector. His career includes 14 years at UBS, of which four were spent in Asia, and eight years as CEO of the Gottardo Bank.

The funds

The compensation funds for old age and disability manage the old age and survivors’ insurance as well as the income compensation allowance, which make up the first pillar of Switzerland’s pension system.

The mandate is to guarantee the payments of the insurances and invest the assets to ensure that yield conforms to market developments.

At the end of 2007, assets amounted to about SFr27 billion.

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