SWITZERLAND - The CHF13.2bn (€10.7bn) Pensionskasse of the Swiss mail service, PK Post, said it planned to "stick with its cautious asset allocation" and underweight equities, as the market environment still appeared to be "uncertain and vulnerable".

For 2010, the Pensionskasse reported a 3.5% return, which is 1.2 percentage points behind the benchmark, but well above the 2% average Swisscanto calculated for a sample of 420 pension funds.

PK Post said the underperformance against the benchmark was mainly due to its "rather low" equity quota at the beginning of the year, which was approximately 23% compared with a strategic level of 29.5%.

In its annual report, the fund said the equity allocation was gradually increased to reach the strategic quota by the end of the year.

However, at the end of the first quarter of 2011, the fund had again underweighted equities, with a 27.8% exposure because the market environment appeared to be "uncertain and vulnerable".

But it stressed it would stick with its cautious asset allocation, which underperformed against the market and the benchmark in 2009.

The fund said it was not invested in any bonds issued by "problem countries" and that there were no plans to invest now despite the high yields.

It also said that almost all its foreign currency exposure had been hedged.

Over the last year, the fund had increased its real estate exposure from 6.8% to 7.1% by making use of "the rare opportunity" to buy into Anlagestiftungen, which are investment foundations mostly closed to new investors and shares in which are seldom sold.

By the end of March, the real estate quota increased slightly further to 7.3%, still well below the strategic allocation of 10%.

The funding ratio reached 98.9% at year-end 2010, but is now slightly down again at 98.6%.

This means the recovery measures started in 2009-10 will continue into 2011.

The PK Post said that - just like last year - the employer would pay the full additional contribution rate of 2% of the salary, taking on the employees' share of the recovery measures.