Swiss roundup: BVK, Pegeba, artax Fide Consult
SWITZERLAND - BVK, the public pension fund for the canton of Zurich, has chosen UBS to run a masterfund structure to "increase governance".
The CHF21bn (€17.5bn) fund, which is set to be released from state control in 2014, announced that it would be combining most of its domestic and foreign equity holdings into a masterfund structure, saying the concept had "proven itself" with many other large Swiss pension funds.
It said the masterfund, comprising CHF9bn in equities to be run by UBS, would simplify administration and cut taxes.
It said the structure would also improve "legal certainty" and governance by introducing "another layer of control".
The public fund had been rattled last year by the filing of corruption charges against its former head of asset management Daniel Gloor.
It has also struggled with a CHF4bn funding gap and member protests against recovery measures.
In other news, Stephan Eng, board member at the Pensionskasse Gewerbe Basel (Pegeba), said in a panel discussion that he did not see the government including pensioners in recovery measures any time soon.
Under current Swiss law, pension benefits cannot be touched once the member of a Pensionskasse is retired, leaving the whole burden of recovering an underfunded scheme with the active members.
Bernhard Madörin, chief executive at artax Fide Consult, agreed that, the moment a member becomes a retiree, they have a legal right to the benefit and become a "holy cow".
At the panel discussion organised by pension service provider B+B Vorsorge, Eng was also asked whether a basic pension with variable top-ups, such as that introduced by PwC in Switzerland, might be a solution to the problem.
But Eng noted that this was only possible in schemes with above-mandatory contributions - similar to other, more DC-like solutions.
Another suggestion on the panel was to promote the free choice of Pensionskassen for members, allowing them to choose fully funded schemes.
However, the participants noted that this would mean a major increase in administrative costs and that many members would be "overwhelmed" by the choice.
Eng also pointed out that this might employers less incentive to make additional contributions to in-house pension schemes.