Basellandschaftliche Pensionskasse (blpk), the pension fund for the Swiss canton of Basel-Landschaft, has decided to make certain technical changes, whcih will include applying generational tables, linking pensions to life expectancy, and at the same time increasing the technical interest rate used to discount future benefits from 1.75% to 2.25%.

The pension contracts ‘VZ 2015’, based on data collected over a specific period of time, but without taking mortality into account, will be replaced by the new ‘VZ 2020’. The new contract will take life expectancy into account.

The blpk is financing the switch to the new system with CHF253m (€256m) already available in the annual budget for 2021, it said.

This means that the changeover is pre-financed, meaning that it is now having a positive impact on the funding level of the scheme, which was hit by poor returns last year, the pension fund said.

Swiss Pensionskassen opt either for generational tables (Generationentafel) or periodic tables (Periodentafel), and for a certain percentage in terms of technical interest rate and conversion rate, that can have a significant impact on the total amount of obligations and the overall financial situation of a pension fund.

The blpk has decided to increase its technical interest rate to 2.25%, from the previous 1.75%,  precisely because it does not have to make a provision of 0.5% per year necessary under the old system of periodic tables, it explained.

The conversion rate used to calculate pension payouts – Umwandlungssatz – remains unchanged, with the funding ratio standing at the end of last year at 103.9%, down from 113.3% in 2021, as a result of negative returns on investments.

The fund returned -9.38% at the end of December last year, from a positive 8.1% in the prior year, according to figures published by the pension fund.

It offers 49 pension plans and has 190 employers as members, including the canton, municipalities, universities, hospitals and retirement homes.

It caters for almost 26,000 employees and more than 11,000 retirees. It has assets under management of more than CHF10.5bn, down from CHF11.7bn in 2021, according to its latest financial statement.

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Luigi is IPE's Berlin-based DACH correspondent. His coverage includes regulation and the latest pensions and investments trends, and, being a native Italian, he also covers Italy’s pensions market. He has reported from Italy and Germany on international politics and business for European and US publications including USA Today, Bloomberg BNA and for the investigative magazine L’Espresso. He was previously Germany correspondent for Mergermarket covering M&A.View full Profile

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