SWITZERLAND - Bernische Pensionskasse (BPK), a CHF8.7bn (€5.3bn) pension fund for Swiss civil servants, will invest more of its assets in equities - particularly overseas stocks - and cut its fixed income exposure from November 1.

The scheme said its equity exposure would total 38% of assets - split evenly between Swiss and foreign shares - from November 1, compared with the 34% now comprised of 18% in Swiss shares and 16% in overseas equities.

At the same time, BPK said total fixed income exposure would total 52% of assets after November 1 against 55% currently. The scheme will keep real estate exposure constant at 4% while raising cash holdings from 5% to 6%.

With the amended investment strategy, BPK hopes to achieve a minimum annual return of 4.2% from 2008 and to increase reserves to 16% of total assets. The reserves are needed to deal with risk associated with market turbulence and the ageing of pensioners.

Judging by its past performance, the scheme's goals appear realistic as BPK's return totalled 4.6% for each of the last five years. The scheme's return for the first half was 2% while its funding ratio stood at 108.5% - the additional 8.5% representing its current reserves.

However, BPK acknowledged its first-half performance was negatively impacted by the recent decline in Swiss bond yields caused by higher interest rates.

BPK insures around 30,000 civil servants and teachers in and around the Swiss capital of Berne and services under 10,000 pensioners.