Swiss liabilities threat to credit quality

Swiss cantons and municipalities’ pension liabilities “pose a threat” to their credit quality, according to rating agency Standard & Poor’s.
The report ‘Swiss cantonal and municipal pension liabilities cloud credit quality’ says that off-balance-sheet liabilities arising from public pension funds is “a burden for the guaranteeing government” and recommends structural changes for under-funded public pension schemes.
The study, based on a sample of 11 local and regional Swiss authorities, has revealed that pension liabilities can affect their budget seriously.
The liabilities of the City of Lausanne’s pension fund, cited as a example, account for 110% of the city operating revenue. Its coverage ratio amounts to 40%, the lowest in the sample considered by the rating agency.

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