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Switzerland paves way for Publica’s DC switch

SWITZERLAND - The Swiss government has sanctioned the inclusion of 105 employers into Publica, the CHF33bn (€20bn) pension fund for federal employees - clearing the way for the scheme's switch from defined benefit to defined contribution next year.

This move to add sponsors was necessary to ensure the government would still honour those employers' pension obligations should one or more employers become insolvent after Publica's switch to DC.

Beyond the switch to DC in middle of 2008, Publica will also raise the retirement age for members of the scheme from to 65.

Publica currently has around 53,000 contributing members and 50,000 pensioners and the scheme is also fully-funded, with a coverage ratio of almost 109%.

However, the scheme has said its coverage ratio must reach 115% - that is 15% in reserves - before it is prepared to credit pension savings at a rate above the current legal minimum of 2.5%.

In separate news, Jürg Maurer, head of investments at Rieter Pensionskasse, one of seven schemes embroiled in last year's Swissfirst affair, has taken the tabloid newspaper "Blick" to court over its coverage of him during the affair.

A Swiss court is expected to deal with Maurer's lawsuit against Blick, in which he charges the paper with defamation of character and distortion of facts, on Monday and Tuesday of next week.

In particular, Maurer is enraged over two statements Blick made during the affair alleging "Jürg Maurer is the most insolent pension fund manager in Switzerland" as well as suggesting "he personally profited from the Swissfirst affair and had a personal account with Bellevue" - one of the banks involved in the affair.

Rieter confirmed Maurer's lawsuit against Blick but declined to comment further.

Prior to a merger between the banks Swissfirst and Bellevue in September 2005, Rieter Pensionskasse and the six other schemes simultaneously dumped shares in Swissfirst. According to Swiss media reports at the time, the schemes timed their trades to assist Thomas Matter, the founder of Swissfirst, in his merger with Bellevue. Maurer and Matter are long-time associates.

However, neither Matter nor Maurer has been indicted by Swiss authorities for suspected wrongdoing. Indeed, last November Rieter fully cleared Maurer following an internal investigation.

Swiss authorities have also found no evidence of wrongdoing on the part of the seven pension funds that held shares in Swissfirst.

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