First Swiss company to abolish management fees for managing pension fund assets
Admicasa Holding AG (BX/ADMI), headquartered in Zurich, is a listed real estate and service company that manages pension assets for investment foundations in the real estate sector. As is customary in the Swiss finance and pension industry, Admicasa has also earned a share of the management fees for the administration and management of pension assets. On the initiative of the Chairman of the Board of Directors of Admicasa Holding AG, Serge Aerne, the company will introduce a completely new "fee model 23" for Switzerland from 1 June 2023.
The management fees will be abolished and replaced by a new management fee that is more advantageous for LOB policyholders. The entrepreneur Serge Aerne, found it disturbing that the management fees for managed assets of LOB investment foundations increase linearly to the managed pension deposits, but the effort for management remains the same or increases only marginally. This fee policy, which has been common in Switzerland up to now, has been at the expense of the LOB insured. They indirectly pay high fees for management services which, according to Aerne, can be offered significantly cheaper. The pension assets under management of the insured are reduced as a result, which in turn means lower pensions.
The flood of fees in the pension market will be stopped
Aerne, Chairman of the Board of Directors of Admicasa, convinced the company’s Board of Directors to introduce a new fee model (“fee model 23”) that is more advantageous for the insured. In this model, the flat-rate management fee, which increases linearly with the growing deposits (economies of scale), is abolished and replaced by a management fee that is more advantageous for the insured. The new fee only covers the asset manager’s effective costs. In future, the economic incentive for the specialised pension asset manager Admicasa will be the performance of the investments. This saves the insured parties high costs and the resulting reduction in the assets of the pension funds. Aerne clearly defines his objective: “My goal is to stem the flood of fees in the pension market. Up to now, a lot of money has been earned with the management fee while the performance of the pension deposits has been insufficient. We want to change this and thus make a direct contribution to safeguarding pensions”.
Terra Helvetica Real Estate Investment Foundation as launch client in the new fee model
The Terra Helvetica Real Estate Investment Foundation, which is strategically focused on “affordable living”, has signed new contracts for the more favourable fee model 23 of Admicasa HoldingAG as launch client.AndréSchlatter,ChairmanoftheFoundationCouncilofthe TerraHelvetica Real Estate Investment Foundation expressly welcomes the new model: “We have had to wait a long time for such a fee model. From 1 June 2023, we will have the opportunity to credit more to the insured at the end of the year thanks to lower costs for managing our pension assets. This initiative is an important and hopefully groundbreaking step towards permanently reducing the management costs incurred. The current contributors and all future pensioners will benefit.
Politicians and administration are challenged
For pension fund expert André Schlatter, the signal effect on the financial sector is in the foreground: “It is not surprising that such a long overdue initiative is launched by a private provider such as Admicasa. Until now, the financial industry has simply earned an obscene amount from management fees from pension funds. This step can lead to a paradigm shift in the entire industry”. The president of the board of trustees of the Terra Helvetica real estate investment foundation also sees politicians and the administration as having a duty. “The pension discussion has been going round in circles for decades. The financial industry must also make a contribution to the insured.