Thorsten Hens, why do you want to sit on the board of trustees?
It’s in my own interest (laughs). I’m affected too, after all: My money is in the BVK pension fund. I work as an advisor to the city’s pension fund and the Vita Joint Foundation, both of which are in much better shape than BVK at the moment. I think it would be good a good idea to put my energy and specialist knowledge at the service of BVK.
Why has the City of Zurich’s pension fund done better?
Firstly, there have been no scandals such as the one involving Daniel Gloor at BVK. Secondly, when the city’s pension fund moved over to the capital cover system, the city provided support in the form of a cash infusion, which allowed the fund to start with a coverage ratio of 140 percent. By contrast, in 1985, when BVK moved over to the capital cover system, the canton failed to pay the full employer contributions; that’s where the problem started.
Daniel Gloor misinvested capital and deceived pension fund members. How substantial do you think the losses were?
Back then, I was the expert for the parliamentary investigative committee for the Gloor case. This means I know the pension fund very well. In financial terms the loss came to “only” half a billion, but it caused lasting reputational damage. In my opinion, the scandal surrounding Daniel Gloor wasn’t handled as well as it could have been. The canton and the serving members of the cantonal council should have been called to account more severely than they were. The BVK board of trustees lacked the expertise to make this happen.
Shouldn’t a board of trustees have this expertise?
At that time, and indeed now, the trustees were laypeople. That’s not a problem provided experts are brought in. But it’s a mistake to rely on a layperson’s knowledge alone. For example, Daniel Gloor used a fortune-teller to predict share prices. Fortunately things have gotten much more professional since Thomas Schönbächler has been at the helm of BVK.
By contrast, even back then, the city’s pension fund had a qualified banking expert heading its investment activities. There were also a lot more people working on the investment side than at BVK. So it shouldn’t come as any surprise that city employees are still better off than we are.
What personal strengths could you bring to the board of trustees if elected?
With my knowledge as a professor of financial economics and many years of experience as an advisor, I know what’s involved in running a pension fund and a professional investment committee. As far as the issue of social insurance is concerned, I know which of the experts in the Swiss market are trustworthy. There I would draw on the know-how of external experts.
How much influence could you exercise as only one of 18 members of the board of trustees?
Many of the trustees standing for election are organized on a trade union basis and tied to their union. But that doesn’t mean they bring the necessary expertise. My influence would depend on how willing the board would be to be guided by the knowledge of an expert. I would try to counter trade union doctrine with persuasive arguments.
You also have support from the VPV, the umbrella body for Canton Zurich employee associations.
I have the backing of the VPV, which is less doctrinaire than the VPOD. But I’m not a member of the VPV.
What do you aim to achieve on behalf of University members?
There has to be more done for part-time employees, both women and men. In concrete terms that would mean getting rid of the coordination offset.*
As far as the lack of transparency and public relations is concerned, I would propose amending BVK’s regulations to allow everything to be disclosed, apart from what has to be kept secret under the law. For example, it would certainly have been possible to carry on a public discussion about the measures to cushion the impact – but not about Thomas Schönbächler’s salary.
I would also want to make the issues – which aren’t so straightforward – understandable for members. Explaining complicated issues in simple terms is part of my job as a university professor.
Where is there an urgent need for action at BVK?
BVK has had to make changes but, like just about every other pension fund, it has done this much too late. So far, it has transferred 450 million a year from us active insureds to pensioners. If they had gone on like that, it would soon have amounted to 800 million. That would have driven BVK to ruin, and we would have all ended up in the Substitute Occupational Benefit Institution’s safety net. Once this scenario emerged, those responsible at BVK should have reacted in time – then our money wouldn’t have gone to those who are already in retirement.
BVK should have put on the brakes and taken steps to address the shortfall in funding. Because the canton failed to pay for sufficient measures to cushion the blow, an unfair discrepancy has emerged between the generations.
What can be done now?
We have to make it clear to the canton and the employers that they still owe us a debt. But even if they now reverse the changes as the VPOD, for example, is demanding, the older generation will continue to live at the expense of the younger generation.
Is there a light at the end of the tunnel?
Last year BVK generated a return of more than 5 percent. That’s a good sign. Now they have to do the calculations for the different generations and work out who got too much and who too little. Then they have to distribute returns over 5 percent in such a way that the discrepancy that has emerged is made good again over time, and each year divide up investment returns to even out the highs and lows. That would be my approach to creating a fair plan.
What’s your stance on flexible retirement and continued employment options from ages 60 to 70 at UZH?
I’m all for flexible age limits for professors, non-professorial academic staff, and administrative and technical staff. But there have to be fair financial arrangements. Why should we sideline someone who wants to keep working when there isn’t enough money for their pension in any case?
**The so-called coordination offset is deducted from annual income to determine what income is insured under the second pillar (pension fund). This is the “insured” or “coordinated” salary. As of 2017 the coordination offset came to CHF 24,675.
Thorsten Hens is professor of financial economics at the UZH Department of Banking and Finance. Last year he represented the professors on the personnel committee that recommended leaving BVK.
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