Lombard Odier partners with PensExpert to enhance pensions offering

Lombard Odier clients now have access to the pension solutions of PensExpert AG, one of the leading providers of tailored pension solutions in Switzerland and Germany. As one of the largest asset managers in the field of occupational and private pension provision, we partnered with PensExpert AG at the beginning of February 2023. This now completes our range of pension provision services in both French- and German-speaking Switzerland.

This makes us a leading bank when it comes to innovative solutions in the area of employee benefits and occupational pensions. Below we explain what customised and flexible pension solutions entrepreneurs, executives or freelancers can expect from us.

Pension solutions in times of uncertainty

The current pensions management environment continues to be challenging: the interest rate situation presents significant headwinds and, in occupational pension provision, falling conversion rates and asset reallocation are high on the agenda. It is therefore important to look at one’s own pension situation and to know where one stands in this regard. This requires that one carefully analyses one’s own pension documents. Only in this way can one determine whether one is well positioned – or whether one should examine optimisation options.

In recent years, many providers of pension solutions have lowered conversion rates and reduced interest rates in the extra-mandatory area. As a result, well-paid executives and entrepreneurs are losing out on the performance to which they are entitled.

But this does not have to be the case. With the pension solutions that Lombard Odier offers together with PensExpert and other pensions partners, such a loss can be prevented. Thanks to the many and varied specialisms of our partners, we can cover practically every need of entrepreneurs or executives in the area of extra-mandatory pension provision. Our solutions are flexible and independent, and therefore detached from the uncertainties mentioned above.

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Avoiding redistribution

In the area of occupational pension provision, a redistribution has been under way for years. This is the result of the low interest rates of the last few years on one hand and the continuous lowering of conversion rates on the other.

The interest rate on credit balances in the extra-mandatory occupational benefit scheme has been adjusted downwards in recent years in favour of the excessively high interest rate in the mandatory benefit scheme (currently 1%, as of March 2023), which until recently was not in line with the market. The same applies to the conversion rates, which have also been regularly adjusted downwards in favour of those in the extra-mandatory area (currently 6.8%, as of March 2023).

If you are insured in the extra-mandatory area, which is usually the case for entrepreneurs and executives, you need to take a critical look at these developments. Lombard Odier offers excellent solutions in the extra-mandatory area, which are set up independently of this situation. The implementation of such an individual solution requires that one is also willing to assume the corresponding risks oneself, which is something entrepreneurs and executives are used to.

Read also: Planning for retirement: the 6 key questions

Forward-looking solutions in occupational pension provision

Lombard Odier offers individual pension solutions for both mandatory and extra-mandatory occupational pension plans. Thanks to the large number of our pension partners, we now offer individual pension solutions for both the normal BVG mandatory and 1e management plans.

The investment strategies of these solutions are implemented at Lombard Odier with individual mandates, whereby the choice of investment strategy is possible within the framework of the applicable LOB¹ rules. Where possible, the implementation takes place with direct investments, unlike most of the other providers. This approach provides policyholders with greater security and clear transparency regarding costs. By selecting, for example, very good quality shares such as blue chips, the pension assets are also securely invested over the long term and protected against market fluctuations.

Unique multi-pocket approach for private and pension assets

Consolidated management of private assets and pension assets is possible at Lombard Odier thanks to its proprietary portfolio management platform. This, in turn, favours a reconciliation of pension assets – even as they are accumulating – and private sector investments.

These assets can be managed in different “pockets”. We recommend investing the portfolio with the restricted pension assets – i.e. the executive pension or the 1e plan, but also the vested benefits – in tax-inefficient securities. These include, for example, shares with high dividends, bonds with high nominal interest rates or real estate funds with taxable distributions.

We recommend investing the private, free assets in more capital gains-oriented or tax-efficient securities, such as tax-free real estate funds, growth stocks, alternative investments such as hedge funds or commodity funds or structured products with low tax consequences. By matching the different “pockets”, it is possible - through a sensible allocation of assets - to exploit the tax advantages. In principle, neither capital gains from private assets are taxed, nor dividends and interest income from pension assets, until they are paid out. In practice, we use a so-called multi-pocket approach to achieve this goal (see illustration).