Its banks may be infamously secretive about their client lists and several James Bond villains chose its Alpine valleys as perfect hideaways, but Switzerland's pension funds are not known to shroud themselves in secrecy  

Zurich Airport, best known to conspiracy theorists for storing gold in vaults beneath its runways, has baffled the country, however, by citing a secret agreement to avoid making pension deficit contributions.

The airport's 1360 employees are members of the deficit-struck Zurich canton BVK public sector scheme. The BVK fund has stumbled 3bn Swiss Franks into the red amidst years of poor returns and some mysterious corruption allegations.

As a major fund with over 90,000 members, the BVK's plight quickly became a political matter. Ursula Gut, Zurich canton's general secretary of finance, presented a deficit reduction plan in 2010 that aims to heal the fund by raising employee contributions and compelling public employers to make deficit reduction payments.

According to Zurich newspaper Tages Anzeiger, the airport is refusing to cough up on the basis of a 2003 agreement struck with the fund that is said to have exempted it from future deficit reduction payments. Spokesperson Sonja Zöchling told the newspaper: "We are of the opinion that an additional arrangement frees us from this duty."

Representatives of the BVK fund have not commented to media but are said to be unhappy at the airport's stance. Pension Funds Insider contacted BVK but was told it will not be commenting on the issue at this stage. A spokesperson added that the fund "does not wish to implicitly confirm with this statement that such agreements exist or do not exist".

Swiss pension experts are questioning how BVK may have been able to strike an agreement that goes against the general pensions principal of all scheme members receiving equal treatment. Some have expressed surprise that this may have occurred at a scheme in the public sector, where transparency is usually paramount. Others, however, have said it could only happen with the loose organisation typical of a large public pension scheme.

One theory is that BVK prioritised keeping member numbers high in the early part of the last decade. Zurich Airport staff were not covered by the scheme until a deal for them to enter in 2000, and it is plausible that special conditions were offered to keep them in the plan if airport management had expressed an interest in pulling them out.

Regional politicians are now facing calls to see if any of the 530 other public employers in the scheme have similar deals in place, as these would compromise the deficit reduction plans. Mediating between Zurich airport and BVK is reported to be an urgent political matter.

Tages Anzeiger wryly noted that should the canton of Zurich follow expectations that it needs to use taxpayer money to bail out the 'crisis fund', as it has termed BVK, the dispute with the airport would quickly be overshadowed by a bigger row. 

First published 03.08.2011

dbillingham@wilmington.co.uk