His speech focused on the current economic situation, including the low to negative interest-rate environment, and the conditions for a return to more normal conditions.
A delegate raised a question – acknowledged as somewhat rhetorical – about the implications of the current monetary policy environment for pension funds, highlighting the difficulty of applying a negative interest rate to the technical rate pension funds are supposed to use.
Qualifying his response by saying he doubted it would be comprehensive, Danthine said “significant adjustments” would be needed if the period of negative rates was to last much longer or become more frequent in future.
These are not only on the side of the central banks but in other areas such as pension fund regulation, in Switzerland and abroad, he said.
“Pension funds have been subject to regulation that today forces them to behave almost like short-term investors,” he said.
“That is absurd. Pension funds need to be able to take a long-term perspective. Regulation needs to adapt to that, and so there are significant changes needed.”
A long-term perspective would be beneficial for the Swiss economy and future pensioners, he added, flagging investment abroad – and without hedging all foreign exchange positions – as an opportunity for Swiss pension funds.
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