SWITZERLAND- The Bundesrat, or upper chamber, of the Swiss parliament is to keep the early-pension option for government employees in the 28 billion Swiss francs (18 billion euro) Publica pension fund by imposing benefit cuts or contribution increases.

The early retirement option, which has allowed 16,000 people in the last two years to leave their job before the standard pension age of 63.5 but at a cost of 90 million Swiss francs, will be kept through a system “cost-neutral” models.

The new models for Publica are to make early retirement financially self-sufficient and are to be introduced in 2006. The Bundesrat said the measures used to make the scheme cost-neutral could include cutting pension benefits or increasing contributions.

“The models should take into account the longer life expectancy and the demands of the people,“ the upper-chamber stated in answer to a question by Walter Mueller, a Member of Parliament.

“The reorganisation, devised by the Bundesrat, eliminates the potential under-funding risk for Publica and will presumably cause an increase of the effective early resignation age of 61.1,” commented the upper-chamber.

Separately, Publica last week said it had received net contributions of 958.3 million Swiss francs in the first seven months since changing its name from PKB - Pensionskasses des Bundes - in July 2003.