Swiss pension fund BLPK turns to voters to decide funding fate
SWITZERLAND – Swiss citizens in the canton of Basel-Landschaft are to decide whether or not their public pension fund, the BLPK, targets full funding.
The CHF5.9bn (€4.7bn) Basellandschaftliche Pensionskasse, which covers cantonal employees and those of the 86 municipalities within the canton, has struggled to find a solution for its funding problems for some time.
The new supervisory body Oberaufsichtskommission (OAK), in one of its first decrees, told public pension funds to decide whether they would continue to rely on state or cantonal guarantees.
This means they can remain 80% funded or aim to achieve full funding by a certain point in time and shift to a defined contribution scheme at the same time.
The regional parliament in the canton agreed to try and achieve full funding for the BLPK, which had an 80% funding level as per year-end 2012.
But the draft failed to get the necessary majority, and a referendum will now be held.
Analysts estimate that the canton alone will have to pay around CHF1bn for the pension fund’s recovery, with the total funding gap amounting to CHF1.6bn, having improved by just over CHF100,000 since year-end 2011.
The partial recovery was aided by a 7.2% return in 2012, compared with 0.2% in 2011, not far off the Swiss average.
But the fund noted in its annual report that the underweighting of Italian and Spanish bonds out of risk-policy consideration led to “significant underperformance” compared with the benchmark.
For 2013, the fund is not considering any major changes to its asset allocation. But it stressed that “broad diversification” would remain a key factor in light of ongoing market uncertainty.