SWITZERLAND – The €8.7bn Swiss Railway pension fund, Pensionskasse SBB, has written to the government to ask for help after posting a CHF2.3bn (€1.49bn) deficit in spite of emergency measures in place for two years.
The scheme, one of the biggest in the country, caters for workers of the railway, SBB and is currently experiencing “serious problems” SBB spokesman Roland Binz told IPE.
The funding ratio of the 58,000-member fund has dropped to 83.4%, in spite of the “restructuring contribution” that both sponsor and members have paid since July 2003.
Members and sponsors pay the equivalent of 1.5% of monthly salaries as a restructuring fee, which brings Pensionskasse SBB’s coffers a total of CHF50m.
Binz explained to IPE that the pension fund was funded in 1999 as an entity independent of SBB, with start-up money from the government, which provided resources for the founding level to be 100% but not enough for reserves.
Binz explained that returns had not met expectations. “It is also a question of having more payees than active members,” he added. According to the fund’s estimates as of the end of 2003, pensioners amount to 28,417 and active members to 29,890.
Rudolf Stampfli, the director of the fund, told IPE that the fund posted a 3.94% return in 2004 and would need at least a 5.5% return to plug the deficit and bring the fund back to 100% solvency.
“The first quarter is not over yet,” he observed in an e-mail. "But the first two months have been satisfactory."
Pensionskasse SBB allocates five percent to liquidity, 10% to mortgages, 47% to Swiss bonds, nine percent to euro-area and US bonds, 10% to Swiss equities, 16% to global equities and two percent to real estate. It has a one percent allocation to alternatives.
Stampfli declined to say whether the fund’s deficit could prompt a change in the asset allocation, but commented: “Help from the state is very important”.
Elisabeth Meyerhans, a spokeswoman for the finance ministry, said that finance minister Hans-Rudolf Merz had not yet read the letter sent by Pensionskasse SBB, but added that finance experts and the fund’s were already in talks to find “a quick solution satisfying to all parties involved”.
The talks will not necessarily end with extra state funding, she explained. The Federal Council is under no obligation to subsidize Pensionskasse SBB, she explained, even if its members have a status similar to public employees.