A plan to inject 2 billion Swiss francs (£1.38bn) into a struggling public sector pension fund might trigger a referendum over accounting techniques used in the recovery plan.
Zurich's cantonal government wants to leave 80% of its planned cash injection into the BVK civil servants' fund out of its current accounts.
It instead wants to finance the majority of the rescue bill with proceeds from a 2005 sale of gold deposits from the national bank, which had been earmarked as a rainy day fund.
Opposition figures from the Swiss People's Party (SVP) and Green Liberal Party (GLP) insist that any taxpayers' money going into the fund should be clearly marked in the Canton's current accounts.
Zurich daily Tages-Anzeiger has reported an SVP spokesman in the cantonal parliament, Gregor Rutz, saying plans to use proceeds from the gold deposit sale were unconstitutional.
Rutz said that "if you make such a big payment, you have to save somewhere else".
The Zurich government is coming under greater pressure to implement austerity measures.
The BVK fund revealed in its 2011 annual report last week that its deficit ballooned by another 870 million Swiss francs last year.
The fund, Europe's 45th largest according to Pension Funds Online league tables, lost 0.7% on its investment portfolio last year. That comes in a year Swiss pension funds broke even with 0.0% investment growth on average.
BVK lost as much as 9.3% on its overseas equities portfolio, its worst performing asset class. The fund blamed the nuclear catastrophe in Japan and the European sovereign debt crisis for the poor result in this sector.
Domestic real estate was the fund's best performing asset class, returning 6%.
Worryingly for its investment managers, the fund outperformed the benchmark in only three of its ten asset classes.
The annual report stated, though, that the BVK has now implemented the recommendations for personnel and structural changes made by an investigation into its administration.
The investigation came after its former head of asset allocation was charged with corruption relating to the past award of mandates.
Should a referendum be held on the recovery plan, it will not be the first time that Swiss voters are consulted on technical detail surrounding pensions. In March 2010 Switzerland went to the polls to reject a plan to lower the mandatory actuarial conversion rate for occupational pension funds.
First published: 26.03.2012
dbillingham@wilmington.co.uk
