SWITZERLAND - The pension fund for the canton of Zurich (BVK) has dropped Complementa and contracted the local division of JP Morgan as custodian.
The BVK said the decisions came as part of a far-reaching restructuring programme in light of recovery measures the scheme must meet before it can be released from state control in 2014.
In a statement, it said: “The BVK continued the review of current mandates, with some being ended, like the one with Complementa, which was responsible for custody and investment controlling.”
State Street acquired Complementa last autumn, and former owner Michael Brandenberger left to take up a position within State Street Investment Analytics.
The BVK said some of Complementa’s former remit would now be covered in house, while the custody mandate has gone to JP Morgan’s Swiss subsidiary.
The scheme has also strengthened its newly established internal risk management system as part of a major overhaul, while increasing its asset management staff from one to five.
Preliminary figures for 2011 show that the BVK’s funding level dropped from 86.5% to approximately 83% year on year, and that the performance for 2011 was negative at -0.6%.
The scheme said the drop in funding had been mainly due to the relatively high discount rate, or technischer Zins.
“This shows how urgent it is to implement the recovery measures suggested by the regional parliament,” it added.
The regional government has earmarked a cash injection of some CHF2bn (€1.7bn) for the BVK, provided that the pension scheme implements a number of structural reforms.
Despite the impact this is likely to have on the canton of Zurich’s debt, Standard & Poor’s has confirmed its AAA rating.
In its report, however, the ratings agency said: “Contrary to our expectations, the cantonal government has proposed the recapitalisation of the cantonal pension fund, and the full impact on the canton’s cash flows will ultimately depend on the timing of the financing.”