SWITZERLAND - Plans to outsource the CHF21.7bn (€13.4bn) Swiss BVK pension fund to a private foundation from January 2009 have been postponed following a drop in its funding level.

BVK, the pension fund for workers of the Swiss canton Zurich, saw a drop of around 10% in its cover ratio following the effects of the US mortgage crisis on global markets.

At the end of last year, when the pension scheme still had a funding level of 105%, the council voted for the separation of the pension fund once funding levels would reach 110%.

At the time, January 2009 was mentioned as the "earliest possibility" for the fund's transformation from a its current status of a so-called ‘öffentlich-rechtliche Körperschaft', a public corporation, into a separate, private foundation.

The benefit of such a private foundation is that the structure of the fund would become a paritairian institutions, with an employers' and employees' council.

A spokesman of the fund told IPE the current funding level of the fund is around 95%, adding it is hard to predict how long it will take to come to 110% in the current market conditions.

"We went from 88% to 105% in four years, but it could also take much longer than that for instance if the economy hits a recession," he commented.

Despite the drop in the funding level, the scheme beat its benchmark by 0.6% with a return of 2.9% in 2007.

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