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Switzerland's ZKB pension fund switches from DB to DC

SWITZERLAND - The pension fund of the Zürcher Kantonalbank (ZKB) in Switzerland is to switch from a defined benefit (Leistungsprimat) to a defined contribution (Beitragsprimat) pension plan.

ZKB said it would structure the new pension plan in such a way that the performance target would remain 70% of the insured salary at age 62.

It also took pains to emphasise that the final payout could exceed or fall short of the target, depending on how investments performed, as well as on an individual’s contribution level or salary development.

The change be effective from 1 January 2013.

At the same time, the discount rate, or technischer Zins, will fall from 3.5% to 3%.

The standard retirement age remains at 62 years, and early retirement is still possible from 58 years of age.

ZKB said some details still needed to be adjusted, including the investment themes, between now and the start date.

At the end of 2011, the pension fund for employees of the bank was invested in securities (67.7%), property (27.3%), liquid assets (0.7%) and ‘other’ investments (4.3%).

The majority of securities consisted of Swiss bonds (23.1%), followed by foreign bonds (12.3%), Swiss equities (11%), foreign equities (9.8%), commodities (7.5%), emerging market equities (3.7%) and private equity (0.3%).

On average, 30.6% of the securities were invested sustainably.

The pension fund’s assets under management amounted to CHF2.5bn (€2.1bn) at the end of last year.

Its performance was -0.6% over 2011, compared with 5.5% the year previous.

The funding level, according to the Swiss BVV2 regulation, stood at 100.88% at year-end 2011.

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