SWITZERLAND – The CHF4.6bn (€2.95bn) Berne teachers pension fund BLVK says it won’t take legal action against those deemed responsible for its financial woes – despite calls from members.

On Wednesday, member delegates unanimously approved a resolution urging the fund to sue “those responsible” for a funding deficit which once totalled more than CHF1bn. The fund has 15,300 members and 5,500 pensioners.

However, BLVK’s management will not act on the non-binding resolution, stressing that a lawsuit would have virtually no chance of success.

“I fully understand the anger of BLVK’s members, who, in order to close the deficit, have seen their contributions go up and their future benefits cut,” said Hans Rudolf Blatti, president of BLVK’s supervisory board.

“But after we, in consultation with two well-known legal experts, assessed the chances of winning a lawsuit, we decided against this move. We don’t want to throw money out the window for no reason,” Blatti told IPE from Berne.

Last August, a Swiss parliamentary committee investigating BLVK found that the deficit was the result of what it called a “risky investment strategy” – namely overexposure to equities prior to the crash of this asset class in March 2000.

The parliamentary committee placed most of the blame on Hans-Peter Sieber, BLVK’s director at the time the strategy was adopted. The committee also said Aon Chuard, BLVK’s investment consultant in the late 1990s, shared some of the blame, since it encouraged the fund to adopt the strategy.

According to Swiss news reports, the committee further recommended that the fund take legal action against those it said were responsible for the strategy.

Aon Chuard has angrily dismissed the committee’s findings. It argues that since it merely acted as an advisor, it is not legally liable for investment decisions made by the fund.

While BLVK has made progress in closing its deficit in past years, it is still underfunded. At the end of 2005, its coverage ratio was 86.39%, up from 79.8% the previous year. The improvement was due to a return of 10% on assets.

In the first quarter of 2006, BLVK had almost 47% invested in fixed income, 28% of which was denominated in Swiss francs and 6.5% of which were convertible bonds. The fund had 25.5% invested in equities, 15.2% of which were foreign and the rest Swiss.

BLVK had another 16% invested in real estate assets, 3.1% in alternative asset classes and nearly 7.5% in cash during the first quarter.

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