SWITZERLAND – The government of the Swiss canton of Valais has unveiled a set of measures aimed at improving the poor financial health of two pension schemes that serve teachers and civil servants in the region.

According to the government, the pension fund serving Valais’ teachers is only 41% funded while another one for civil servants is 53% funded. The government put the combined deficit for the two schemes at CHF1.4bn (€840m).

Swiss law allows public pension funds to run deficits owing to a state guarantee. However, the canton’s government has said that it would provide a maximum of CHF658m in financial support.

To deal with the schemes’ underfunding, the government said it would raise the retirement age for certain types of civil servants, freeze benefits for pensioners for five years starting in 2006 and switch the schemes to defined contribution from defined benefit in 2010.

The government also said it would be slightly reducing its contributions to the schemes while raising those of the teachers and civil servants.

With these measures, the authorities hope to raise the funding levels of both schemes to 80% from 2009.

In 2003, a sudden deterioration of the pension funds’ finances prompted an official investigation into whether they had been mismanaged.

The canton’s government suspended Ignace Rey, the former president of the teachers’ scheme, but a local court later cleared him of any wrongdoing.

Situated in the heart of the Swiss Alps, the canton has 250,000 habitants.