Act on the Pension Fund of AR (PKG) - Name, Legal Form, and Registered Office (PKG)

1. Under the name Pension Fund AR, there exists, in accordance with Article 108 of the Cantonal Constitution, a public-law pension institution managed according to actuarial principles with its own legal personality. Its headquarters are in Herisau.

1. The Pension Fund AR serves the occupational provision for the insured against the economic consequences of old age, death, and disability.

1. The following are mandatorily affiliated with the Pension Fund AR by law

a) the employees and authority members of the canton;

b) the staff of the independent public institutions of the canton, including the hospital network of Appenzell Ausserrhoden and AR Informatik AG;

c) the teachers at the public schools.

2. Additional personnel may be affiliated with the Pension Fund AR through a contract. The prerequisite is that the respective employer predominantly carries out public duties within the canton.

1. The AR Pension Fund is managed based on the principle of full capitalization.

2. It provides retirement benefits based on the savings credit balance (defined contribution scheme).

3. It provides benefits in the event of disability and death before retirement, based on the insured salary (defined benefit scheme).

4. For insured persons who are legally affiliated with the AR Pension Fund, the standard insurance applies. In affiliated contracts, differing insurances may be offered.

1. The standard insurance is based on a contribution plan, funded at a total rate of 44% with contributions from the insured individuals and 56% with contributions from the employers.

1. The insured annual salary is the basis for calculating the annual contributions and the restructuring contributions.

2. It corresponds to the annual salary according to the Federal Act on Old Age and Survivors' Insurance, less occasional salary components and the coordination deduction as per the Occupational Pensions Act (BVG). For part-time employees, the coordination deduction is proportionally reduced.

3. The management commission determines which occasional salary components can be deducted from the annual salary.

4. The maximum insurable annual salary corresponds to the maximum of salary class 20 according to the salary ordinance.

1. The annual contributions consist of savings, risk, and administration cost contributions.

2-3 ...

4. The management commission establishes the annual contributions within the framework of the legal requirements in the pension plan regulations. New determinations can only take effect at the beginning of a year and must be published at least six months before they become effective.

5. ...

1. The savings contributions serve to accumulate the savings balance.

2. In standard insurance, the savings contributions as a percentage of the insured annual salary are

Age | Insured | Employer

--- | --- | ---

18 - 19 | 2.8 - 5.2 % | 4.2 - 7.8 %

20 - 24 | 3.8 - 6.2 % | 5.7 - 9.3 %

25 - 29 | 4.8 - 7.2 % | 7.2 - 10.8 %

30 - 34 | 5.8 - 8.2 % | 8.7 - 12.3 %

35 - 39 | 6.8 - 9.2 % | 10.2 - 13.8 %

40 - 44 | 7.6 - 10.0 % | 11.4 - 15.0 %

45 - 49 | 8.6 - 10.6 % | 12.9 - 15.9 %

50 - 54 | 9.2 - 11.2 % | 13.8 - 16.8 %

55 - 59 | 9.8 - 11.8 % | 14.7 - 17.7 %

60 - 65 | 10.4 - 12.4 % | 15.6 - 18.6 %

66 - 70 | 5.6 - 8.8 % | 8.4 - 13.2 %

1. The risk contributions are used to finance benefits in the event of disability and death. They may include a portion for financing a higher conversion rate.

2. In the standard insurance, the total risk contribution for insured persons and employers amounts to a maximum of 4% of the insured annual salary.

1. The Pension Fund AR levies an appropriate contribution to cover administrative costs.

2. The amount of the contribution is determined based on the administrative costs of the last financial statement and taking into account the budget forecast for the collection year.

1. In the event of restructuring, the Pension Fund AR may establish and levy a temporary restructuring contribution based on a restructuring plan devised by the occupational benefits expert. The employers shall bear at least 50% of the total restructuring measures, taking into account any potential reduction or non-interest of the insured persons' savings capital.

2. The restructuring plan shall be communicated to the employers and the insured persons at least six months prior to the initial imposition of the restructuring contributions.

1. If the federal legal basis for the assessment of contributions changes, the Administrative Commission shall take appropriate measures to prevent or mitigate immediate hardships for the insured individuals or the employers.

2. For this purpose, the Administrative Commission may, in particular, deviate from the coordination deduction according to Article 6 paragraph 2 and from the contribution framework according to Article 7a paragraph 2.

1. The administrative commission determines the benefits in the pension regulation. It must be ensured that the BVG minimum benefits are provided in every case.

1. The Bodies of the AR Pension Fund are

a) the Board of Trustees

b) the Executive Management

c) the Audit Office

1. The Administrative Commission is the supreme body of the AR Pension Fund. It assumes overall management, ensures the fulfillment of statutory responsibilities, determines the strategic goals and principles, as well as the necessary means required under this Act for their achievement.

2. The Administrative Commission establishes the organization of the AR Pension Fund, ensures its financial stability, and supervises the management. It issues the necessary regulations, particularly concerning pension provisions, investments, technical reserves, organization, and the election of commission members.

1. The Management Commission consists of eight or ten members who must be insured with the Pension Fund AR. It is composed equally of employee representatives and employer representatives.

2. The Director of Finance is an ex officio member of the Management Commission as an employer representative.

3. The Management Commission constitutes itself. If the chairmanship is held by an employee representative, the vice-chairmanship is reserved for an employer representative, and vice versa.

4. Resolutions are made by a simple majority of those present. The casting vote alternates each administrative year between the employer and employee side. Circular resolutions are permissible.

1. For the election of employer representatives and employee representatives, the administrative commission shall divide the insured persons into electoral districts. In doing so, it shall ensure, as far as possible, a balanced distribution of the insured persons across the electoral districts.

2. In the election regulations, it shall establish the modalities for the election of employee representatives and employer representatives in the individual electoral districts.

3. The term of office shall be four years.

1. The Managing Director is responsible for the day-to-day operations of Pension Fund AR. He or she is subordinate to the Board of Trustees and participates in its meetings in an advisory capacity.

2. The employment relationships of the Managing Director and the other staff of Pension Fund AR are governed by cantonal personnel law. The Board of Trustees may issue different regulations in cases required by the Occupational Pensions Act (BVG).

1. The Administrative Commission shall engage a recognized auditing firm to conduct an annual audit of the management, accounting, and asset management in accordance with the provisions of the BVG.

1. The Cantonal Council acknowledges the annual report and the annual financial statements as part of its supervisory duties annually.

1. The cost-of-living allowances granted by the Executive Council chargeable to employers until December 31, 1993, which are to be paid for life, shall be settled by the employers with a one-time contribution calculated based on actuarial principles by the occupational pension expert as of December 31, 2014.

1. The affiliated employers shall make a one-time contribution as of January 1, 2018, to mitigate the loss of benefits in future retirement pensions. The contribution amounts to a maximum of 15,000 Swiss Francs per insured person.

1. The administrative commission gradually adjusts the financing of the standard insurance to the new contribution plan.

2. For achieving the financing ratio pursuant to Art. 5, an implementation period of two years from the entry into force of the partial revision applies.

1. Disputes between the AR Pension Fund, employers, and entitled persons shall be decided by the Higher Court. Upon request of the entitled person, the AR Pension Fund must document its position in writing and provide justification.

2. The procedure is governed by the Occupational Pensions Act and the Administrative Procedure Act.

1. This Act shall come into force on January 1, 2014.