SWITZERLAND - The regional government of the Swiss city of Basel has committed to plugging the hole in its pension scheme by the end of this year.
A number of recovery packages had been mooted for the CHF9bn (€6.75bn) public employees' fund, which, as at the end of 2009, had been 90.8% funded in the portfolio for civil servants and 92.2% funded in the portfolio of other partly public companies that joined the fund.
According to the recovery package agreed on by the regional government, the fund will receive a one-off payment on 31 December amounting to approximately CHF800m, the amount the civil servants portfolio was short at the end of September last year.
If the funding is greater than this sum at the end of December, the city will have to pay in more. But as the Pensionskasse returned 3.7% for the first 10 months of 2010, its funding situation should have improved slightly.
As at the end of October, the fund had around 34% in bonds and 30% in equities, another 18% in real estate, 1.2% in commodities and 7% in mortgages - the rest was cash.
Half of the sum will be paid by the city, while the other half has been pre-financed by the city on behalf of the employees.
From 2011, active members in the fund will see their Pensionskassen contributions increase by 1.6 percentage points to 10.1%, while the city's contribution will be cut by the same amount to 18.4%.
At the same time, indexation of pensions paid out over the coming years will be cut.
Both measures will be reversed once the fund reaches a 110% funding ratio or the active members have paid back their debt to the city, which is expected to take around 12 years.
Individual companies that have joined the fund have drawn up individual recovery packages.