UBS Charges Pension Funds To Hold Their Liquid Assets

(MENAFN- Swissinfo) Pension funds are complaining about 'negative interest' charges for holding liquid assets in accounts at Switzerland's largest bank UBS. This content was published on September 1, 2025 - 09:37 4 minutes SRF

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UBS's letter is quite significant. At the end of June, the bank informed its institutional clients – primarily pension funds and insurance companies – in writing that it would be forced to charge interest on transaction accounts at -0.2% starting in mid-July. This was because the Swiss National Bank had lowered its key interest rate to 0%.

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Pension fund holders who park liquid assets with UBS have been paying negative interest again since mid-July – that is, CHF2,000 on CHF1 million held in cash.

UBS confirmed this upon request but said the -0.2% fee is technically not negative interest, but rather a fee that arises because UBS must keep liquidity available for institutional clients at all times. UBS says these additional costs are passed on.

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The bank states:“For pension fund and insurance deposits, banks in Switzerland are subject to the highest liquidity and quality requirements. This results in costs due to the expansion of the balance sheet and the associated higher capital utilization – in both positive and negative interest rate environments.”

On the UBS platform for pension funds, this is called“High Quality Liquid Assets costs,” while on the Credit Suisse platform it is simply called“negative interest on deposits.”

Pension funds angry

No matter what the policy is called, the consequences for pension funds are always the same, says Lukas Müller-Brunner, director of the pension fund association Asip.“In essence, this results in nothing other than that holding liquidity leads to costs, even if the Swiss National Bank has not yet decided on negative interest rates,” he told Swiss public broadcaster SRF.

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Many pension funds are also upset that UBS gave them only two weeks to respond to the new rule. However, the pension funds contacted by SRF do not want to publicly criticise UBS.

Many say that UBS has become too powerful in the pension fund market since the demise of Credit Suisse, which it bought in 2023. This is the only reason UBS can enforce such fees across the board.

Pension funds are now looking for ways to circumvent UBS's negative interest rates. However, Lukas Müller-Brunner says that completely foregoing liquidity isn't possible:“It's important for a Swiss pension fund to be able to keep a certain amount of pension assets actually liquid. This could be to pay pensions, or for someone who changes employer and joins the pension fund to then contribute the funds – or the opposite, for someone to leave the pension fund.”

Large amounts are also due because people are increasingly withdrawing lump sums instead of pensions when they retire.“A pension fund simply cannot avoid keeping a certain amount of retirement savings in the account as liquid assets,” says the Asip director.

Other domestic and foreign banks do not impose such a fee. Only Zurich Cantonal Bank, in particular, stated upon inquiry that negative interest rates are possible in individual cases – depending on the size of the transaction and the customer relationship.

Either way, the whole thing is unpleasant for the insured: every franc that is taken away from them means they will miss out on a pension in old age.

Translated from German by DeepL/mga

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