SWITZERLAND – Canton Thurgau will have to pay off 76.9 million francs (51 million euros) in deficits to allow the merger in 2006 of two public sector pension funds with SFr1.68bn in assets.

The state officials’ pension fund, the SFr1bn Pensionskasse des Staatspersonals (SPK), is Sfr76.9m in deficit currently, whereas the teachers fund, the SFr680m Pensionskassen der Lehrer (PKL), is in surplus. The canton is required to pay off the deficit through a loan, having already lent SPK SFr150m in 2001.

SPK has a covering ration of 96.2% whereas PKL’s is 107.3% funded and has about SFr13.3m in reserves. The two funds together would have more than 10,000 active and retired members. If the merger took place, the new fund would enjoy a state guarantee until it reached a covering ration of 115%.

Kurt Rueegg, president of LPK, told local media that if the financial side of the matter were solved there would be nothing against the scheme. “We feel bound in a common fate with public employees.“

SPK’s president, Peter Pauli, stressed the merger would have advantages for both parties. He pointed out that SPK and PKL have worked on joint management since 1999 and have “identical rules”.

A final decision on the merger is expected in September.