Lombard Odier partners with PensExpert to enhance pensions offering

    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.

    This makes us a leading bank when it comes to innovative solutions in the area of employee benefits and occupational pensions

    Read also: How to boost your pension provision with equity investments


    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).

    Thanks to the large number of our pension partners, we now offer individual pension solutions for both the normal BVG mandatory plan and for 1e management plans

    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.

    Consolidated management of private assets and pension assets is possible at Lombard Odier thanks to our proprietary portfolio management platform

    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).

    An holistic approach to tax optimisation and safeguarding needs in old age

    With financial planning, we show which cash flows are needed to pay for future requirements. For this purpose, we distinguish between short-term, medium-term and long-term needs. The number of years we define for each phase is adapted to each client's wishes. In the classic approach, we define the first 5 years as the short-term requirement period, the next 5 to 10 years as the medium-term requirement period, and the period from 15 to 20 years as the long-term requirement period.

    By determining the capital required in the respective phase of life, we create a starting point with which we conceptually determine the individual investment strategy with our clients. We achieve this by matching the individual risk tolerance with the investment horizon.

    Pension funds proceed in a very similar way, as they have to ensure short and medium-term pension payments and – so that they can meet long-term obligations – to generate further income in capital markets with the remaining assets. An investment concept based on individual financial planning thus functions like a private pension fund solution.

    Now that Lombard Odier has significantly expanded its offering with PensExpert and has numerous pension partners, we can cover a wide range of needs

    Setting up a pension fund-like investment solution requires a holistic approach. First, we work out an overview of the existing total assets, the income to be expected from them and the associated costs. We also estimate what taxes our clients will have to pay in the future, including one-off taxes on any lump-sum payment from the pension fund.

    We need this comprehensive analysis to be able to assess whether our client needs to draw a pension at all to cover his or her regular liquidity requirements. As already mentioned, we include all tax aspects in the assessment – both in the short term for a lump-sum withdrawal and in the long term for a pension withdrawal.

    Read also: Tax deductions and Pillar 2 buybacks


    Cooperation between PensExpert and Lombard Odier as an opportunity for our clients in German-speaking and French-speaking Switzerland

    The agreement to work with PensExpert in the future opens up unique opportunities for our clients, and also for Lombard Odier itself. PensExpert can be described as a pioneer of innovative pension solutions in the area of executive pensions and employee benefits. The same applies to Lombard Odier with regard to the tax-efficient management of these assets. In German-speaking Switzerland in particular, Lombard Odier now has an extremely attractive offering for our existing and future clients when it comes to providing outstanding solutions for the management of their private and pension assets. Thanks to our proprietary technology platform, this is possible on a consolidated basis. This makes us the only bank currently able to implement an investment philosophy of this kind.


    Now that Lombard Odier has significantly expanded its offering with PensExpert and has a number of pension partners, we are in a position to cover a wide range of needs – be it with a single or association solution in the executive pension area or with a QROPS solution2.


    1 LOB: Federal law on Occupational Retirement, Survivors' and Disability Pension Plans and Disability Pension Schemes
    2 QROPS: The 'Qualified Recognised Overseas Pension Scheme' is suitable under certain conditions for pension assets from the UK and possibly other Anglo-Saxon countries.

    Important information

    This document is issued by Bank Lombard Odier & Co Ltd or an entity of the Group (hereinafter “Lombard Odier”). It is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful, nor is it aimed at any person or entity to whom it would be unlawful to address such a document. This document was not prepared by the Financial Research Department of Lombard Odier.

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