Collective foundations manage the pension assets of multiple companies on the basis of two fundamental models: pool solutions and individual investment strategies.
Pool solution: Under the pool solution, the capital of all affiliated employee benefits units is managed in one or more joint investment pools. The foundation board defines the investment strategy, and all risks and returns are shared. This option cuts down on administration and simplifies matters for the companies involved.
Individual investment strategy: Many collective foundations also offer customised investment solutions. Above a certain investment volume – for instance from around CHF 10 million – companies can define their own investment strategy, tailoring it to their specific risk profile and return targets. Under this solution, the employee benefits units are responsible for risks, coverage ratio and interest rates.
However, companies can also have a say in the standardised models. Many collective foundations offer a choice of different investment pools with varying risk profiles – for instance, with equity exposures of 25, 35 or 50 percent. Company representatives can also sit on the foundation board or the investment committee and play a role in shaping the investment strategy.
This involvement fosters identification with the chosen solution and means that specific requirements, such as higher liquidity or security needs, can be taken into account – even without an individual strategy.
Which solution for which company?
Standardised pool solutions are usually the best option for small and medium-sized enterprises (SMEs). The benefits are lower costs, reduced admin and professional implementation. Around 98% of Swiss companies – most of them SMEs – are affiliated with a collective foundation.
Larger companies which have more complex needs or can draw on in-house expertise often prefer customised strategies. Their priorities are greater control and flexibility and a solution that is tailored to their specific risk capacity and investment outlook.
Summary
Collective foundations today offer a range of solutions, from straightforward and well-established to tailor-made and fully controllable. The key is for each company to choose the model that best suits its size, risk profile and in-house expertise.
GEMINI offers flexible investment options
The GEMINI Collective Foundation offers its affiliated companies a flexible and transparent solution. Each company has its own employee benefits unit with its individual coverage ratio, balance sheet, income statement and notes, ensuring that the companies always have a clear picture of their financial position.
There is a choice of three standardised investment pools with a 25, 35 or 50 percent equity exposure, which can be changed or combined free of charge twice a year. Thanks to this freedom of choice, the investment strategy can be tailored precisely to each company’s risk capacity.
Companies with an investment volume of CHF 10 million or more can also opt for a customised investment strategy. They can continue to work with their current asset manager, a solution that combines continuity with scope for individual choice.
Pool solution or individual strategy?
Select the best investment solution for your company.
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