Act on the Cantonal Pension Fund (Pension Fund Act, PKG) (Pensionskassengesetz, PKG) - Name, Seat (PKG)

1. The Pension Fund of the Canton of Nidwalden (Pension Fund) is an autonomous institution of cantonal public law with its own legal personality and headquarters in Stans.

1. The pension fund insures the employees of the employers subordinate to and affiliated with it against the economic consequences of disability, old age, and death. It conducts the mandatory insurance pursuant to the BVG (Federal Law on Occupational Retirement, Survivors’ and Disability Pension Plans) for its members as a registered pension scheme.

2. It may provide services in the personnel sector for third parties in exchange for a cost-covering compensation.

1. This law applies to the canton and its autonomous institutions as employers.

2. The government council may approve the affiliation with another pension institution for certain personnel categories.

3. This law applies to the members of the government council. Full-time and part-time members of authorities and commissions can be subjected to this law by a decision of the government council.

1. The pension fund may, by contract, regulate the affiliation of the following bodies, institutions, and companies

1. Political municipalities, school municipalities, and church municipalities;

2. other public-law entities;

3. charitable institutions that have a connection to the canton;

4. private-law companies in which the canton or the municipalities hold either voting rights or capital interests and that have a connection to the canton.

1. The Pension Fund regulates membership in the pension fund through a regulation; it may, in particular, set a specific annual salary as an entry threshold.

1. The insured salary corresponds to the annual salary reduced by the coordination amount and is limited as follows

1. for retirement benefits, to the permissible maximum insurable salary according to BVG;

2. for disability and death benefits, to ten times the maximum AHV retirement pension.

2. The pension fund governs the details of the eligible salary components in a regulation.

3. The coordination amount corresponds to 30% of the relevant annual salary, but not more than 7/8 of the maximum annual AHV retirement pension.

1. Bodies of the Pension Fund are

1. the Board of Directors;

2. the Executive Management;

3. the Audit Office.

1. The Board of Trustees of the Pension Fund consists of eight members, who equally represent the employers and the employees.

2. The members must enjoy a good reputation and provide assurance of impeccable business conduct.

1. The Government Council elects the employer representatives. It elects

1. one member for the canton;

2. one member for the autonomous institutions of the canton; and

3. two members for the employers affiliated by contract.

2. The employees directly elect the employee representatives. The Board of Directors regulates the election procedure; it must ensure that the employees are represented on the Board of Directors by

1. one member for the canton;

2. one member for the autonomous institutions of the canton; and

3. two members for the employers affiliated by contract.

3. The election of the Board of Directors members is for the constitutionally prescribed term of office.

1. The Board of Directors shall constitute itself.

2. The presidency and vice-presidency are to be alternately filled every two years by an employer representative and an employee representative.

3. A member may be elected to the presidency or vice-presidency multiple times.

1. The Board of Trustees is the highest governing body of the pension fund. It assumes overall management responsibilities, ensures compliance with legal obligations, determines the strategic goals and principles of the pension fund, as well as the means to achieve them. It establishes the organization of the pension fund, ensures its financial stability, and supervises the management.

2. It enacts the necessary regulations, particularly concerning

1. the organization;

2. the benefits;

3. the investment of assets; and

4. partial liquidation.

3. The Board of Trustees appoints the management, the auditor, and the occupational pension expert.

1. The Management is the operational executive body of the Pension Fund.

2. It is responsible for all matters not assigned to another body by law or regulations.

1. The approval and duties of the audit firm are governed by the Federal Law on Occupational Retirement, Survivors' and Disability Pension Plans (BVG).

1. The District Administrator takes note of the annual business report of the Pension Fund.

1. The financing is carried out according to the full capitalization system.

1. The recurring savings contributions of actively insured persons and employers are calculated as a percentage of the insured salary according to Art. 6, Para. 1, No. 1

BVG Age | Employee Savings Contributions | Employer Savings Contributions

17-24 | 0.0% | 0.0%

25-29 | 6.0% * | 7.5% *

30-34 | 7.0% * | 9.0% *

35-39 | 8.0% * | 10.5% *

40-44 | 9.0% * | 12.0% *

45-49 | 10.0% | 13.5% *

50-54 | 11.0% * | 15.0% *

55-59 | 12.0% * | 16.0% *

60-65 | 12.0% * | 16.0% *

2. Upon the continuation of gainful employment after the regular retirement age according to Art. 72a PersG, the savings contributions of actively insured persons are 9.0% and for employers 12.0%. The insured person can declare in writing to the pension fund that they wish to completely forgo the collection of savings contributions.

3. The recurring risk contributions of actively insured persons and employers each amount to 1.25% of the insured salary according to Art. 6, Para. 1, No. 2. Upon reaching the regular retirement age, the risk contributions are reduced by 0.5% each.

4. The BVG age corresponds to the difference between the current calendar year and the birth year of the insured person.

1. The pension fund offers selectable savings plans for the insured individuals, in which employees can make additional savings contributions.

2. The board of directors establishes the selectable savings plans in a regulation.

1. Each employer may include additional savings contributions of up to a total of 3% of the insured salary per year, as specified in Art. 6 para. 1 no. 1, in special savings plans.

2. These savings plans may also be designated for specific categories of employees only.

3. The board of directors shall establish the special savings plans available to employers in a regulation.

1. The savings contributions are used to accrue the savings capital of the insured persons.

2. The risk contributions are utilized for the funding of

1. the risk of death, disability, and longevity;

1a. * the compensation of conversion losses;

2. contributions to the security fund;

3. administrative and other costs.

3. Upon leaving the pension fund, there is no entitlement to the risk contributions.

**1. The Pension Fund is authorized to adjust the percentage rates of savings contributions according to Article 16, paragraph 1, for each age category by a maximum of:**

1. * an increase of 10%, if the contributions are insufficient in the medium term to ensure that, upon occurrence of the pension event, the continuation of the accustomed standard of living is maintained in an appropriate manner in conjunction with the old-age, survivors', and disability insurance;

2. * a decrease of 10%, if upon occurrence of the pension event, the continuation of the accustomed standard of living is appropriately maintained in conjunction with the old-age, survivors', and disability insurance.

**2. The Pension Fund is authorized to adjust the recurring risk contributions according to Article 16, paragraph 3, to the same extent for the insured persons as well as for the employers, and by a maximum of:**

1. * two percentage points increase, if the contributions are insufficient in the medium term to ensure the financing according to Article 18, paragraph 2;

2. * two percentage points decrease, if the financing according to Article 18, paragraph 2 is assured.

**3. ...**

1. If, according to the actuarial balance sheet of the previous year, there is an underfunding, the pension fund shall adopt a recovery plan for the following years to restore full coverage.

2. The recovery plan is limited in time and includes in particular the following measures

1. Under-crediting of the savings accounts of active and disabled insured persons with an interest rate below the BVG minimum interest rate. The interest rate for crediting the savings accounts must be at least 0%; and

2. Recovery contributions from the contributing active insured persons with a BVG age over 24 years and from the employers.

3. The under-crediting and the recovery contributions must be decided within the following framework conditions

Coverage ratio at the start of the recovery in % | Employee: Under-crediting in % | Employee: Recovery contributions in % of the insured salary according to Art. 6 para. 1 no. 1 | Employer: Recovery contributions in % of the insured salary according to Art. 6 para. 1 no. 1

--- | --- | --- | ---

under 80 | 1.00 | 2.5-5.0 | 5.5-7.5

80-85 | 0.75-1.00 | 2.0-4.0 | 4.0-6.0

85-90 | 0.50-0.75 | 1.5-3.0 | 3.0-4.5

90-95 | 0.25-0.50 | 1.0-2.5 | 2.0-3.0

95-100 | 0.00-0.25 | 0.0-1.5 | 0.0-2.0

4. The employers must contribute a total of 50% to the recovery measures.

1. The pension fund sets out the provisions regarding benefits in regulations.

2. The contribution-based system applies to retirement benefits. The defined benefit system applies to disability benefits.

3. The pension fund strives to provide sufficient insurance benefits in conjunction with the old age, survivors, and disability insurance to allow for the continuation of one's accustomed standard of living in an appropriate manner.

1. The standard retirement age is 65 years.

2. Early retirement or deferred retirement is possible.

1. Termination of membership in the pension fund can be effected by either party with a notice period of six months, effective at the end of a calendar year.

2. The pension recipients assigned to the membership remain in the pension fund.

1. The employer is required to fully fund the missing pension capital, including technical provisions, for the pension beneficiaries left behind at the time of dissolution. The existing pension capital, including technical provisions, shall be calculated based on an interest rate that

1. corresponds to the rate of the ten-year federal bond, reduced by 0.5 percentage points, but not less than 0%; or

2. corresponds to the technical interest rate reduced by 0.5 percentage points, if the technical interest rate is lower than the rate of the ten-year federal bond.

2. The employer must

1. fulfill any outstanding obligations; and

2. in the event of a shortfall at the time of dissolution, fully fund the missing savings accounts without considering technical provisions.

1. The new provisions also apply to persons insured at the time this Act enters into force as well as to pension recipients.

2. In the areas in which the pension fund is responsible according to this Act, it shall issue the transitional provisions in a regulation.

1. As of January 1, 2014, the pension fund has a claim against the canton in the amount of the deficit as of December 31, 2013.

2. The amount of the deficit is calculated based on the accounting principles of the Pension Fund Nidwalden valid on December 31, 2011, particularly the technical interest rate applicable at that time.

3. The canton records the entire debt without affecting its income statement; the independent institutions as well as the employers affiliated by contract are not required to record the debt.

1. The canton redeems and pays interest on the debt using a constant annuity. This annuity is to be set high enough so that the recognized debt can be redeemed and paid with interest within 40 years.

2. The annuity is due for the first time on December 31, 2014, and thereafter annually on December 31 of the respective calendar year. The portions of interest and redemption must be explicitly stated.

3. With the payment of the annuity, the remaining debt is reduced by the portion of the redemption; reserved are Art. 29 paragraphs 3 and 4.

4. The annuity will be adjusted every five years, provided the interest rate changes according to Art. 28.

1. The Interest Rate Corresponds To

1. In the first five years after the enactment of the law, the average annual interest rate of the long-term debts of the Canton of Nidwalden as of December 31, 2013;

2. For the subsequent periods of five years each, the average annual interest rate of the long-term debts of the Canton of Nidwalden of the year preceding the period.

2. In calculating the average annual interest rate of the long-term debts of the Canton of Nidwalden, debts that serve the financing of financial assets are not to be considered.

1. Independent institutions, as well as employers affiliated by contract, annually reimburse the canton a portion of the annuity, each year as of December 31.

2. This portion corresponds to the proportional share of the underfunding as of December 31, 2013. It is calculated based on the savings capital of the active insured persons and the pension capital of the pension recipients that are allocable to the employers as of December 31, 2013; the calculation bases according to Art. 26 para. 2 apply.

3. Instead of making annual payments, independent institutions and employers affiliated by contract can reimburse their share of the underfunding and/or the remaining residual debt of the canton as of December 31, 2013, directly to the pension fund. This payment may be made in the form of

1. a one-time payment by December 31, 2014, at the latest, plus the accrued interest according to Art. 28;

2. a maximum of ten consecutive annual installments, with the current interest pursuant to Art. 28 to be paid annually in addition to the amortization. The first installment must be made by December 31, 2014, at the latest; or

3. a one-time payment by December 31 of a calendar year at the latest, with a six-month notice period, plus the interest accrued in that year according to Art. 28.

4. If a direct payment is made pursuant to para. 3, the residual debt of the canton is reduced to the extent of the repayment portion of the corresponding payments.

1. If the employer terminates the affiliation contract after the enactment of this law, they must proportionally reimburse the canton for its remaining debt to the pension fund as of December 31st of the respective calendar year.

2. Payment must be made by December 31st of the respective calendar year at the latest.

3. The reimbursement amount can be paid in a maximum of ten consecutive annual installments, whereby the ongoing interest pursuant to Art. 28 must also be paid annually in addition to the amortization.

1. The first term of office of the Board of Directors of the Pension Fund begins on July 1, 2014.

2. The Pension Fund Commission pursuant to Art. 56 of the Law of June 25, 2008, on the Cantonal Pension Fund (Pension Fund Law, PKG) shall assume its duties until the start of the Board of Directors' term.

1. For pensions that first became due before January 1, 1990, the district council may decide on the allocation of cost-of-living allowances at the expense of the former employers.

2. These decisions are binding for all former employers whose employees are affiliated with the pension fund.

1. Upon withdrawal from the pension fund, there is no entitlement to the cost-of-living adjustments made before this law came into effect.

1. The funds that remain as technical provisions in the inflation fund pursuant to Article 25 of the Law of June 25, 2008, regarding the Cantonal Pension Fund (Pension Fund Law, PFL) upon the enactment of this law, serve to mitigate benefit reductions for new retirees, which arise due to benefit adjustments by the pension fund.

2. The board of directors decides on the use of the funds in the inflation fund.

1. The Act of December 17, 2008, on the Compensation of Authorities (Compensation Act) is amended as follows: ...

1. The Law of June 3, 1998, on Public Employment Relationships (Personnel Act, PersG) is amended as follows: ...

1. The Law of June 25, 2008, on the Cantonal Pension Fund (Pension Fund Act, PFA) is repealed.

1. This law is subject to the optional referendum.

2. It comes into effect on January 1, 2014.