investment income should be sufficient to finance the technical interest rate. page 7 / 8 these outgoings, either benefits could be decreased or the period of benefit payments could be shortened. we do not express any preference as to which of these mechanisms is used. making such a choice always involves a delicate balancing of interests, which is a matter for political circles rather than the snb. under these circumstances, however, it is clear that there is unfortunately no easy, universal solution. adjusting to the realities of the investment world and demographic change comes at a price. and something else is also clear : in a pension system like ours, in which the key parameters are defined in nominal terms, this price will keep rising until such time as the problems are tackled. but holding on to the status quo also comes at a price. for example, we are seeing a rise in redistributions from young to older insureds, which was never intended by the system. this is also why the term ‘ lifestyle ’, as used in the relevant article of the federal constitution, targets purchasing power rather than any nominal quantity. workable solutions can be found at the start of my talk i drew your attention to an international ranking of pension systems ( cf. chart 6 ). in other countries, too, the population enjoys rising life expectancy while savers bemoan the low interest rates. denmark and sweden, for example, which are now ranked several places ahead of our country, have implemented far - reaching and thus painful measures to stabilise and modernise their pension systems. denmark has linked the retirement age to life expectancy, and sweden is making the level of pension payments directly dependent on demographic and economic developments. these two examples show that it is possible, even in this politically fraught area, to find workable solutions. ladies and gentlemen, the snb is not responsible for social policy. but allow me to finish by stressing once again how important it is to us that switzerland ’ s pension system should continue to perform its pivotal economic and social function as well as possible. we are also aware of how critical the situation is for the pension funds, given the persistently low interest rates. at the same time, we cannot say when the negative interest rate will no longer be necessary. the snb ’ s contribution to a strong pension system is maintaining price stability in our country. adapting the parameters to economic and actuarial realities is an ongoing task of both pension fund managers and political bodies – in normal as

##m mandate, but it is clear that certain national discrepancies will continue to apply, if only because they are beyond the reach of this consultation. for instance, the european text recognises as cet1 instruments deferred tax credits and in some instances the shares of cooperatives banks held by their clients, notwithstanding the fact that these shares are repayable when the clients terminate their banking arrangements. competitive differences will thus continue to apply within the eurozone, and even more within the eu. that is, however, primarily an issue for co - legislators, and competitions authorities, rather than the mandate of the prudential supervisor. ignazio angeloni has also delineated how the ssm has been conducting the first round of the common supervisory review and evaluation process ( srep ) in 2015, with a view to determine the so - called pillar 2 capital requirements. the srep decisions will be finalised in the coming weeks but it has already been publicly said that the pillar2 capital requirements envisaged for the ssm significant institutions in 2016 are slightly higher than in 2015. pillar 2 capital is held to account for those risks not fully captured in the standard pillar 1 requirement, such as concentrations of exposures, and must be held at all times, just like pillar 1. so i will add my voice to ignazio angeloni ’ s and acknowledge that the amount of both pillar one and pillar two capital requirements are material for investors in securities issued by credit institutions. the prudential supervisor is right in willing to preserve a space for a private dialogue and engagement with the banks on the way it assesses them, and the detailed appraisal of their risk profiles need not be disclosed. but the sum of all capital requirements of a bank, including macroprudential buffers, can hardly be held secret to those who own it or to those who are asked to provide it credit. a final issue of substance that i wish to address is that of enforcement. it is the central bank ’ s strongly held view that enforcement is critical to supervision, including to prudential supervision. here also, the unfortunate experience of the irish financial regulator of the previous decade has convinced us that the credible use of enforcement must be deployed to be an effective supervisor. the ssm so far has not yet concluded nor managed to significantly progress enforcement cases and in some cases found legal difficulties in national competent authorities bringing to a close their own cases. even though the ssm supervisory powers only extend