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Cantons reject mandatory full funding

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  • Cantons reject mandatory full funding

SWITZERLAND - Swiss cantons officials have rejected government proposals to pass a law which would oblige all public funds to become fully-funded over the next 40 years, just as funding levels are falling further.

"The cantons want to retain more flexibility and do not want the federal government to dictate the financing of retirement provision," said a spokesman for the conference of the cantonal governments (KdK).

He added the cantons are "aware of their responsibility and are willing to act on it on their own terms".

The federal Swiss government had suggested in 2007 it would force all public funds to become 100% fully-funding over the coming years, as several public funds are still below the 80% mark.

Critics of the government's plan argued public funds worked under different premises than other occupational funds and were more of a funded PAYG scheme. (See earlier IPE article: Front against conversion rate cut grows)

Meanwhile, two public funds in the Swiss capital of Berne have revealed the financial crisis has affected their funding levels.

The CHF5bn (€3.4bn) BLVK, for teachers in Berne, said its funding level has dropped by 15.1% to 73.5% and the fund failed to beat the benchmark by 0.9 percentage points by returning -14%.

However, this return renders it just under the average of pension funds in Switzerland. (See earlier IPE story: Swiss funds hit historic returns low)

At the same time, the CHF8bn Bernische Pensionskasse (BPK), for other government employees in the canton, saw its funding level drop to 87.3% from 94.1% in September last year and the fund returned -13.1% in 2008.

If you have any comments you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email julie.henderson@ipe.com

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