LIECHTENSTEIN – Preliminary findings of an investigation into the CHF600m (€500m) public sector pension fund of Liechtenstein PVS cited a “complex system” that is “difficult to understand”.
When the Liechtenstein parliament received a request for CHF313m in financial aid from the Pensionsversicherung für das Staatspersonal (PVS) for more than 4,000 public employees, it wanted to know what caused the funding gap and commissioned Zurich-based Swisscanto to conduct an investigation.
Swisscanto has now published a preliminary report in which it finds the system is “very complex” and “not easy to understand”, making it “difficult for responsible people to make the right decisions”.
For example, according to the special law for the public fund, it had three different ways to report its funding level, some of them forward-looking and only for a certain part of the fund, which made it difficult for trustees to gauge the fund’s financial situation.
Additionally, some of the fund’s reportings may have “contradicted experts’ recommendations” on accounting standards.
Swisscanto also noted a “significant underperformance” against the benchmark, which it attributed to “poor choices”, as well as frequent changes in asset allocation.
In 2011, the PVS lost 2.5% compared with the 5.2% needed to stabilise the funding level.
Stephan Wyss, heading the project at Swisscanto, stressed to IPE that this was “only a preliminary report”, and that no final conclusions would be made until the final report was ready in February.