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To fund or not to fund now – a Basle question

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SWITZERLAND - Parties in the Swiss canton of Basle City are divided over whether or not to postpone payments to the pension fund in light of the current financial crisis. The fund, which had been fully funded with the help of money from the canton at the beginning of this year, has fallen to a funding level of under 95% as per end-October with a year-to-date return of -9.5%. (See earlier IPE-story: Volatile markets widen Basle hole to CHF2.8bn  Under a law passed by the canton last year the fund has to take measures for recovery once it falls below 95% - this is a stricter regulation than the one in effect for the rest of Switzerland where the critical mark is 90%. The measures which have to be taken are increased payments both by members as well as the employer, which is the canton's government. However, the socialist Basle-Stadt SP wants to see these measures postponed and the money to be used to boost the economy instead. The party, which estimates the hole in the fund will reach around CHF100m (€63.5m), argued the gap should only be filled should it last over several years. "The SP thinks it is completely misguided to use taxpayers' money to fill a hole which quite possibly will be amended by market corrections within a few years anyway," the party said in a statement. However, several conservative parties in the canton do not agree and have issued a joint statement in which they accuse the SP of "irresponsible behaviour". "The Pensionskasse was not created for anti-cyclical economic behaviour," said rival political parties. They stressed the money in the fund had to be seen completely independent from the canton's economic situation and noted law required it to start refilling the fund once it falls below 95% funding level. 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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