SWITZERLAND – A special commission investigating the financial problems of a pension fund for civil servants in the city of Fribourg has placed part of the blame for the scheme’s troubles on its former trustee.
In past years, the public scheme in question has been grossly underfunded, with its coverage ratio – used to gauge the extent to which liabilities are funded – falling to as little as 31.4%.
Swiss law permits underfunding at public pension funds owing to a state guarantee.
Indeed, the situation at the small scheme forced Fribourg’s government to bail it out to the tune of €19m in January. At the same time, a special commission led by Claude Joye was formed to look into what went wrong.
According to Swiss press reports, Joye has sharply criticised Dominique de Buman, trustee of the scheme between 1991 and 2004, for not being honest enough about the fund’s financial woes.
“We should expect that people who are in charge of such an institution for more than 10 years have the competence to run it,” Joye was quoted as saying.
The commission did not find any evidence of wrongdoing by de Buman or others involved with stewardship of the pension fund in Fribourg, which has around 33,600 inhabitants.
However, this was not enough to quell de Buman’s rage over the report. Speaking to Swiss journalists, he demanded that Fribourg’s public authorities declare the report “worthless” - adding that if they did not he would seriously consider legal action.
The Fribourg scheme is just one of several Swiss public pension funds that have become seriously underfunded.
Others include BLVK, a scheme insuring teachers in the Swiss capital of Berne, and two schemes insuring civil servants and teachers in the Swiss canton of Valais.
BLVK is currently in deficit, mainly caused by overexposure to equities during the market crash. Meanwhile, the government for the Valais canton has partially plugged a deficit of CHF1.4bn at the two civil servant schemes.