SWITZERLAND – Bernische Pensionskasse (BPK), a pension fund for civil servants in the Swiss capital of Berne, says last year’s positive equity markets enabled it to finish 2005 with a significantly better return and overfunding.
On its website, BPK, with CHF8.2bn (€5.2bn) in assets, said its return jumped to 12.4% in 2005 from just 4.2% in 2004. The return is just under the industry average of 13%.
Meanwhile, BPK said its coverage ratio – the extent to which pension liabilities are met – improved to 108% in 2005 from 100.7% in 2004. BPK is unique among Swiss public schemes in being well overfunded.
Despite the strong performance, BPK has no apparent plans to raise the interest rate on accumulated savings from its members. Swiss news reports said BPK’s board wants to use part of last year’s earnings to build up its reserves to 17% of total assets from 8% currently.
By law, Swiss schemes must guarantee an annual rate of interest on the savings. The rate is currently 2.5%.
At the end of 2005, BPK had 34% of its assets invested in equities, 18% of which were domestic and 16% of which were foreign. The pension fund had a further 46% invested in Swiss franc-denominated bonds and 8% in bonds denominated in foreign currency.
Real estate assets, including direct holdings, accounted for another 7% of BPK’s assets, while cash was 5%.
BPK has 29,179 contributing members, from which it took in CHF304m last year, and 9,626 pensioners.
Separately, the pension fund for Swiss watchmaker Swatch said it finished 2005 with a return of 12.5% and a coverage ratio of 120% - its second-best year on record.
However, in a newsletter to its members, the fund said the results were still provisional in nature and had to be confirmed by experts.
In any case, Swatch’s pension fund said that it would be using part of last year’s earnings to build reserves.
The scheme did not disclose its assets in the newsletter and a spokeswoman for Swatch Group in Basel flatly declined to comment.
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