Swiss public schemes told to get fully funded
SWITZERLAND - The Swiss Federal Council (Bundesrat) wants to see all local and federal authority pension schemes on a 100% funding level by 2038.
Once the law is passed, all fully or over-funded public pension schemes must not drop below the 100% mark while all others will be given 30 years to reach full-funding level.
Underfunded schemes will have to get their plans for cutting the deficit approved by the supervisory body. Furthermore, the Federal Council will report to parliament every ten years about the progress the funds make.
The bill, published this week, will put public schemes under the same requirements private schemes have to meet. Cantons, politicians and interested parties can file comments on the proposal until October 15. After that, the bill will go to parliament.
Under the current rules, Swiss public schemes have been granted a financial guarantee by the state can remain partly-funded under certain circumstances.
The Federal Council's proposal deviates from suggestions made by an expert commission earlier this year.
In a report to the council, it stated requiring full-funding for all public schemes would be an "unbearable financial burden" for the authorities.
Public pension funds were CHF10.6bn (€6.4bn) short of full-funding status in 2006, while 43% of all public schemes were underfunded.
Several public schemes have already started to tackle their deficit.
Publica, the CHF30bn pension fund for Swiss federal employees, will switch from a defined benefit to a defined contribution scheme for all members and the CHF8.6bn BPK for the canton of Bern is contemplating a similar move.
The CHF21bn BVK for the employees of the canton of Zürich, currently 105% funded, will be outsourced to a foundation after January 2009 once it has reached a funding level of 110%.
Meanwhile, the CHF8bn Pensionskasse for the city of Basle has finalised details on its plan to tackle the deficit of just over CHF1bn. The canton will pay the sum needed to bring the funding level from currently around 79% to 100%. And the pension fund will stay a defined benefit scheme but it will lose its state funding guarantee.