The year 2012 is already rich in highlights for the Pension Fund Governing Board (PFGB)

In this new column, the Chairman of the Pension Fund Governing Board (PFGB) will regularly present the latest main decisions, initiatives and accomplishments of the Governing Board to the members and beneficiaries of the Fund.


At the start of the year, the PFGB examined the question of the contribution rate for new members joining the Fund after 1st January 2012. The PFGB confirmed that, on the basis of the independent expert's calculations, the proposed total contribution rate of 31.6% for new members is sufficient to finance their pension promise. The proposed new contribution rate was subsequently approved by the Council at its March 2012 meeting.

The PFGB has also approved the assumptions to be used in the preparation of the Financial Statements of the Fund for the year 2011. The assumptions for longevity will reflect the latest Swiss publicly available longevity tables (see here). The investment return assumption will continue to reflect the objective set by the Council, which stands at 5% per annum, expressed as 3% per annum over a long-term inflation assumption of 2%. The Financial Statements will be submitted to the Council this June.

In the area of investments, the PFGB closely monitors the progress of the implementation of the Fund’s capital preservation approach. The restructuring of the investment portfolio was approximately 20% complete as of the end of 2011. Another 30% of the portfolio is scheduled to be restructured during 2012. The Fund’s capital preservation approach, which is set out in the Fund’s Statement of Investment Principles and Investment Policy, aims at reducing the Fund’s sensitivity to market downturns while improving the efficiency of the investments. While the efficiency of the investment portfolio has already improved, the performance will remain sensitive to market downturns as long as the large majority of the assets have not been restructured. As of 31 March 2012, the Fund has returned an estimated 3.96% year to date.

In February, the PFGB made an unanimous recommendation to the Council to reappoint the Chief Executive Officer, Théodore Economou, for a second three-year term. The Council subsequently made that appointment in March.

At its February meeting the PFGB also completed the update of the Financial Regulations of the Fund, which were then submitted as a White Paper to Finance Committee and Council in March. A finalised Green Paper version will be prepared for the June meetings of the Finance Committee and Council. These regulations will set forth the rules governing the financial administration of the Fund, including procurement.

In February 2012, the PFGB appointed Pierre Sauvagnat, a French citizen and director at Banque Cantonale de Genève, as an expert member of the Investment Committee. Sauvagnat’s professional experience, which spans several decades in major banking institutions, along with his deep knowledge of investment products and his experience in asset/liability management, were viewed as a most useful addition to the committee.

Finally, on behalf of the Governing Board, I wish to express my gratitude to Dorothée Duret, former Vice-Chair, who resigned in March 2012, for her outstanding contribution to the Governing Board. In her more than five years of service on the Board, Dorothée was a key member of the PFGB with her brilliant and rapid grasp of the multifaceted tasks and challenges before it. I wish to acknowledge her deep commitment to her work, and her personal support to me in her capacity as Vice-Chair.

Dan-Olof Riska,
Chairman, Pension Fund Governing Board