SWITZERLAND - The majority of recovery-measure statements for the underfunded public pension scheme for the canton of Zurich (BVK) have blamed the local government for the fund's current financial situation.

In a public consultation, the canton of Zurich received 252 statements from companies, municipalities and authorities within the collective BVK scheme, as well as unions and political parties.

While most agreed to the suggested cut in the discount and conversion rate, the majority wants the canton to bring the BVK back to full funding.

Last year, the fund returned 2.2%, which brought the funding level back down from 87.3% to 86.5%.

The district court of Andelfingen, one of 12 districts within the canton of Zurich, said:

"The one-off recovery of the BVK is entirely to be financed by the canton, as it is responsible for the bad situation. As soon as the BVK is healthy again, the members will contribute their share to a long-term recovery."

Other statements contain similar demands, with some mentioning the losses suffered by a reduction of contributions from the canton prior to 2000.

Calls for more transparency on the financial situation of the fund, as well as an external appraisal of the financial situation, can also frequently be found in the statements.

The local court in the district of Zurich criticised the questionnaire sent out as part of the consultation on the recovery measures as "leading and biased".

Some link the current financial situation to the case of alleged corruption against the former head of asset management at the BVK and some fund managers.

The BVK and the local government in the canton of Zurich have denied this link.

But one company - in which the canton holds a larger share and whose statement was made anonymously - pointed out that a financial contribution by the canton would be "a certain compensation for the fact the management of the BVK was not ideal".

The district court Zurich said: "The damage done by the alleged fraudulent actions of the former head of asset management at the BVK has not been fully established yet."

An unidentified municipality said: "Before levying contributions for recovery from employees and employers, the losses from bad investments and criminal activities by the former head of asset management should be quantified and reimbursed by the canton."

The district court of Zurich said this was not a good time to start recovery measures, as markets were on the rise again. It added that much of the underfunding could be attributed to market movements.

The local government said it was checking the statements to see which demands could be met in an amendment to recommendations on recovery measures.

 

Read more on Switzerland and the situation of the BVK in IPE's June issue.

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