CPEG, the pension fund for the Swiss canton of Geneva, has unveiled a set of structural measures to improve its funding level that could have the effect of cutting future pension benefits by up to 15%.

At a meeting last week, the committee responsible for managing the CHF12bn (€11bn) fund – which comprises employee, pensioner, and employer representatives – confirmed a plan to raise the age at which members can take a full pension from 64 to 65 as of 1 January 2018.

The committee also decided to lower the target pension level. The pension fund said this measure would be accompanied by other technical measures of less importance, but the cumulative effect could be a lowering of pension benefits by up to 15% for active members.

The pension fund committee did not to fix a date for cutting target pensions as it wanted to wait for a draft law on the future of the pension fund to be filed and debated. The cantonal government said it would present a draft law by the end of the spring this year.

If no law has been passed by the end of June 2018 CPEG’s committee said it would then settle on a date for the measures to kick in.

The measures proposed by the pension fund were intended to “restore CPEG’s financial equilibrium”, the fund said in a statement.

CPEG, which was created in 2014, has the weakest funding position of all Swiss pension schemes, according to Christophe Decor, director general of CPEG. As at the end of 2016 CPEG’s funding ratio stood at 57.4%, while at the end of March it was estimated to be 58.1%.

The pension fund gained an estimated 5.5% in 2016.

Décor said that despite good management, CPEG was in a “fragile” situation, mainly due to the Swiss central bank’s introduction of negative interest rates in January 2016 and the lowering of the technical rate to 2.5% at the end of 2016.

Swiss federal law requires public pension institutions to be funded up to 80% by 2052.

Décor said it was the CPEG committee’s responsibility to consider lowering benefits if financing was not assured.

The public authorities, meanwhile, said they were also exploring ways to shore up the fund.

In early April, the Geneva cantonal government presented the parliament with a rough outline of a rescue plan for CPEG. This turned on three “cumulative axes”: injecting additional capital, cushioning the benefit reductions currently under discussion with a view to keeping benefits attractive, and moving to a defined contribution system.

Addressing the parliament, the president of the cantonal cabinet, François Longchamp, said that in the eyes of the cabinet it was “essential” for the reform to succeed.

The measures decided by CPEG’s committee still need to be approved by the fund’s supervisory authority and an approved expert.

Read about Swiss pension reform in IPE’s May magazine.