SWITZERLAND - Two in five of Switzerland’s occupational pension funds are underfunded, according to Association of Swiss Pension Funds (ASIP) .

ASIP, which represents 1,300 occupational pension funds with 2.2m members, has estimated that 43% have less than 100% coverage of their liabilities.

Until now there have been no precise figures on underfunding, although up to date official statistics are expected in the autumn. Current official estimates of pensions suggest that between 30% and 50% were underfunded at the end of 2001.

ASIP’s estimates of funding levels at the end of 2002 show that one in five (19%) of pension funds had more than 110% coverage while two in five (38%) were 100% covered. Of the underfunded pension funds, a third (33%) had coverage of between 99% and 90% while only one in ten (10%) had coverage of less than 90%.

This squares with the experience of individual pension funds. For example, Siemens has revealed that it had a deficit of 9% in its Swiss pension fund at the end of 2002.

Local and federal government funds may have fared worse, however. Funding levels at BVK, the public authority pension fund for the canton of Zurich, fell to 84.8% at the end of March this year, although it has since risen to 88%.

SBB Pensionskasse, the pension fund of Swiss railways, has reported 80.5% coverage at the end of 2002 The 19.5% deficit is result of a loss of CHF 1.7bn (Euro 1.1bn) last year on top of a loss of CHF 1.03bn (Euro 0.67bn) in 2001. Next month SSB is increasing pension contributions by 3%, divided equally between employer and employee, to fund the deficit.