SWITZERLAND - Around a fifth of employer clients - some 31 local authorities - are to leave the Aargauische Pensionskasse (APK), the CHF6bn (€3.6bn) pension fund for local government employees. The move is planned for December.
The assets of the 31 local authority clients involved amount to some 5% of APK's total assets under management, according to the fund.
In July IPE reported the city of Zofingen's decision to switch to the CHF1.7bn Comunitas, following news that APK faces a funding deficit equalling CHF1.5bn, partly resulting from overexposure to equities during the 2000-2003 market downturn.
Relative to liabilities, APK is only 77.3% funded, one of the lowest known ratios for a Swiss Pensionskasse.
APK announced in a statement yesterday that the funds' departure was in connection with its decision to change from a defined benefit scheme to a defined contribution set-up as it works towards fully funded status.
In March the Argau cantonal parliament stated that the move would cost CHF120m, CHF40m of which would be paid by the canton and the remaining CFH80m by local authorities.
Nonetheless, the city of Neuenhof has announced it will stay with APK, despite receiving various tenders from APK's competitors.
Neuenhof said it was satisfied with APK's performance, and questioned whether the fund's competitors would be able to deliver the returns they promise.
In the meantime, APK has said the migration of funds will not have any financial implications.