SWITZERLAND - The Swiss occupational pension commission has recommended the government keep the minimum return rate for Pensionskassen at current levels.

A "large majority" of the so-called BVG-Kommission for the mandatory second pillar has told the government it would leave the minimum return at 2%.

The recommendation is mainly based on calculations comparing the returns of bonds - mainly Swiss government debt - as well as equities and real estate.

At year-end 2008, the minimum return had been cut from 2.75% to 2% in the wake of the market downturn - the rate is now at its historical low, having started at 4% in 1985 when the mandatory second pillar was set up.

The government will decide on the issue this autumn - last year, the decision was published in October.

The Aargauische Pensionskasse (APK), the public pension fund for the Swiss canton of Aargau, has posted a slight loss of 0.4% for the first half of 2010.

Susanne Jäger, chief executive at APK, said equities, commodities and the strong Swiss franc contributed negatively to the performance.

She also pointed out the fund did not take stock in a double-dip recession scenario, but added that the low interest environment was "a concern".

APK's six-month performance of CHF7.8bn (€6bn) is only slightly worse than other Swiss averages calculated for the period.

But July contributed very positively to the performance, bringing it up to 1.14% for the first seven months of 2010.

After a positive performance of 11.05% for 2009, the Pensionskasse was again 99.8% funded as at year-end 2009, despite having suffered a loss of 16% in 2008.

The main source for the losses - apart from equities - was hedge funds, which fell by 28.5% in the course of 2008, and which APK had entered only months before the crisis.