SWITZERLAND - The CHF21.7bn (€13.4bn) Swiss BVK pension fund has seen a further drop in its solvency levels, pushing its planned privatisation even further away.

BVK, the pension fund for workers of the Swiss canton Zurich, saw its cover ratio drop to 83.5% at the end of last month, from 89% the month before, suffering from further losses on its domestic and global equities portfolio.

Plans to outsource the scheme to a private foundation from January 2009 have already been postponed since earlier this year (See earlier IPE story: Swiss BVK fund separation postponed), making a separation of the pension fund even less likely.

At the end of last year, when the pension scheme still had a funding level of 105%, the council voted for the separation of the pension fund once funding levels reached 110%.

At the time, January 2009 was mentioned as the "earliest possibility" for the fund's transformation from a its current status of a so-called ‘öffentlich-rechtliche Körperschaft', a public corporation, into a separate private foundation.

The benefit of such a private foundation is it would allow fund to alter its structure into a paritairian institution, with an employers' and employees' council.

In a communiqué to the fund's members, the BVK's chief executive Rolf Huber wrote: "It is naturally the case that an improvement of the current cover ratio can only take place together with a recovery of the financial markets."

He added: "With the backdrop of the current financial markets crisis, the still-high inflation rates and the expected slowdown of the economic situation, this improvement might take a while."

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