LIECHTENSTEIN - The CHF330m (€230m) public fund for federal employees in Liechtenstein might be changed from a defined benefit to a defined contribution system.

Financial consultant Josef Sele has collected 1,560 signatures calling for a change to the system in order to sustain it.

In Liechtenstein, the collection of 1,000 signatures from citizens eligible to vote suffices to get a bill into parliament, at which point it must then be discussed and voted on.

Sele worked for Zurich Financial Services before setting up his own consultancy "Vorsorge" dealing with occupational and private retirement provision.

He argues the current defined benefit system is "too complex, opaque and costly" to be workable in a time of increasing job mobility and demographic changes.

In the defined contribution system "pension payments and the financing of liabilities is not easily traceable," he noted.

Furthermore, Stele believes the switch would also mean the state no longer has to contribute regularly to the fund which is currently 12% underfunded.

"A change from defined benefit to defined contribution would mean a one-off contribution which could either be paid once or over a period of time," he explained.

This would make the current state guarantee superfluous.

However, the suggestion is not undisputed and union representatives fear massive cuts in pensions as well as a rise in employee contributions.

They also want the state to continue guarantee the pension fund as it is a mandatory system into which every employer and employee in the public service has to pay 5% of gross salary each.

"If not the state, who else would have the responsibility to guarantee our pensions?", they wrote in an open letter on the discussion around the federal pension fund.

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