Act governing the Pension Fund of the Canton of Valais (CPVAL) (LCPVAL) - Purpose and Scope (GPKWAL)

1. This Act governs the organization and powers of the Pension Fund of the Canton of Valais (hereinafter: PKWAL).

1. The election of the board members of the PK and the appointment of the members of the management board shall take place from October 1, 2019, for an office term commencing no later than January 1, 2020.

2. The board of PKWAL shall determine the modalities of this election in the spring of 2019.

1. The reference age is 62 years for all insured persons, except for the staff of penal institutions and the cantonal police, for whom a reference age of 60 years applies.

2. The conditions for flexible retirement are regulated in the pension regulations of the GPK.

1. The maximum total amount of the AHV bridging pension, which is decisive for the employer's financing share pursuant to paragraph 2, corresponds to the annual maximum AHV pension multiplied by the number of years between the reference age and the AHV age, provided there is a membership duration of at least 20 years with the PKWAL.

2. Within this limitation, the financing of the AHV bridging pension is equally ensured at 50 percent by the employer and 50 percent by the insured.

1. If the GPK no longer has to pay pensions to beneficiaries and there remain surplus funds after its dissolution, these will be transferred to the OPK, with which the State of Valais insures its personnel.

2. The Board of Directors may dissolve the GPK prematurely and transfer its group of pension beneficiaries as well as the available pension assets to the OPK, with which the State of Valais has insured its personnel, provided that the latter assumes the remaining obligations according to the state guarantee as defined in Article 72c BVG by means of payment.

1. The State of Valais shall bear the costs associated with the transitional arrangement due to the change to the defined contribution system as of January 1, 2012, with the exception of costs relating to the personnel of the affiliated institutions and individual insured persons.

2. This assumption occurs in the event of the activation of the static pension guarantee, which was granted to the insured of PKWAL upon the change to the defined contribution system as of December 31, 2011, on an annual basis based on the actually paid benefits and corresponds to the difference between the static pension and the pension amount that would be paid out at the conversion rate applicable to the GPK.

3. The costs of the transitional arrangement that concern the personnel of the affiliated institutions shall be borne by the respective institutions.

4. These costs can, depending on the choice of the respective institution, be covered by a one-time payment within a period of six months after the entry into force of the present amendment or in the form of annual payments. The corresponding amounts shall be determined by the Board of Directors of PKWAL.

1. The Canton of Valais bears the costs of the compensation system, which limits the pension loss for the insured persons of the GPK and the OPK to a maximum of 7.5 percent with the application of the new conversion rates.

2. The new compensation system takes into account the possible triggering of the static pension guarantee.

3. Insured persons who commenced their employment from September 1, 2018, are not entitled to compensation by the Canton of Valais.

4. The assumption of the costs for the compensation is made through a one-time capital contribution by the Canton of Valais to the GPK and the OPK, the amount of which is determined by the State Council. The exact amount of the sum is determined by the occupational benefits expert of the PKWAL based on the financial situation of the fund and its insured members as of December 31, 2019.

5. The costs of the transitional arrangement, which affect the staff of the affiliated institutions, are borne by those institutions.

6. These costs can be covered, depending on the choice of the respective institutions, either through a one-time payment or in the form of annual payments. The corresponding amounts are determined by the Board of Directors of the PKWAL.

1. The Canton of Valais shall cover the costs of the compensation system for the insured persons of the OPK to partially balance proportionally to the duration of insurance as of the implementation date of the reform.

2. Insured persons who commenced their activity on or after September 1, 2018, are not entitled to compensation from the Canton of Valais.

3. The coverage of the costs for the partial compensation is effected through a one-time capital contribution by the Canton of Valais to the OPK, the amount of which shall be decided by the State Council. The exact amount is determined by the occupational pension expert of the PKWAL based on the financial situation of the fund and its insured members as of December 31, 2019.

4. The costs of the transition provisions that affect the personnel of the affiliated institutions shall be borne by those institutions.

5. These costs may, at the discretion of the respective institutions, be settled either through a one-off payment or in the form of annual payments. The corresponding amounts are established by the board of directors of the PKWAL.

1. Upon the entry into force of this law, the Special Financing Fund as per Article 9 of the Law on State Pension Institutions (GSVE Fund) shall be transferred to the PKWAL Fund according to Article 22c of the Law on the Administration and Financial Management of the Canton and its Supervision (FHG).

2. The balance of the GSVE Fund shall constitute the initial capital of the PKWAL Fund.

1. PKWAL prepares a closing balance sheet as of December 31, 2019.

2. This balance sheet includes the pension obligations as of January 1, 2020, and is the subject of a special report by the audit firm and the expert in occupational pensions.

1. Insured persons receiving a pension as of January 1, 2020, as well as active insured persons who joined PKWAL before January 1, 2012, will be affiliated with GPK.

2. Active insured persons who joined on or after January 1, 2012, as well as insured persons joining on or after January 1, 2020, will be affiliated with OPK.

3. PKWAL establishes in its regulations the implementing provisions as well as rules for special cases.

1. PKWAL prepares a consolidated opening balance sheet as of January 1, 2020, as well as two separate opening balance sheets for the GPK and the OPK on the same date.

2. These balance sheets are subject to a special report by the auditing firm and the occupational benefits expert.

3. PKWAL establishes the implementation modalities for preparing the opening balance sheets, taking into account the requirements set out in this law and the principles of equal treatment within the circles of beneficiaries concerning the benefits of the GPK and the OPK from January 1, 2020.

4. The opening balance sheets are delivered to the affiliated employers and the supervisory authority.

1. The GPK is funded according to the system of partial capitalization pursuant to Article 72a BVG and has a guarantee from the State of Valais pursuant to Article 72c BVG.

2. The financing plan of the GPK aims at a gradual capitalization of the fund until its conversion into a pension fund and its dissolution following the extinguishment of its obligations.

3. The financing plan, which is subject to prior approval by the supervisory authority, is established by the State Council through regulations.

1. The OPK is subject to the full capitalization system.

2. On January 1, 2020, it receives the amount of withdrawal benefits of the insured persons affiliated with it, as well as their share of the provisions and collective reserves as of December 31, 2019, up to the coverage ratio of the PKWAL as of December 31, 2019.

3. The State of Valais finances, through a one-time allocation, the difference between the amount of the withdrawal benefits and the share of the provisions and collective reserves that are connected to the OPK as of January 1, 2020, and the corresponding amount that is reduced to the coverage ratio of the PKWAL as of December 31, 2019.

4. The State of Valais also finances, through a one-time allocation, the amount necessary to create the fluctuation reserve, amounting to 15 percent of the total pension capital of the OPK, as calculated according to the regulations for the technical insurance liabilities as of January 1, 2020.

1. The determining salary and the insured salary are defined in the legislation concerning the personnel of the State of Valais, the teaching staff, as well as the magistrates.

2. These terms also apply directly or analogously to the affiliated institutions according to the PKWAL provisions.

1. The ordinary contribution rates of employers for the insured persons of the GPK are determined according to the following contribution scales

| Age | Contributions Category 1: Reference age for retirement at 62 years with a progressive salary system | Contributions Category 2: Reference age for retirement at 60 years with a progressive salary system | Contributions Category 3: Reference age for retirement at 62 years with a non-progressive salary system |

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

| 22-24 | 5.20% | 7.30% | 4.20% |

| 25-29 | 6.20% | 8.30% | 4.20% |

| 30-34 | 7.20% | 9.30% | 4.20% |

| 35-39 | 9.20% | 11.30% | 6.20% |

| 40-44 | 11.20% | 13.30% | 9.20% |

| 45-49 | 13.20% | 15.30% | 14.20% |

| 50-54 | 19.20% | 21.30% | 19.20% |

| 55-57 | 23.20% | 25.30% | 24.20% |

| 58-59 | 25.20% | 27.30% | 24.20% |

| 60-61 | 27.20% | 11.60% | 24.20% |

| 62 and above | 11.60% | 11.60% | 11.60% |

2. The affiliated institutions shall pay an additional contribution of 2.5 percent of the insured salary as a contribution to the gradual full capitalization of the GPK. Institutions, where the pension obligations of their staff are 100 percent covered, are exempt from this contribution.

1. The Contribution Rates for Insured Persons of the GPK up to the Standard Reference Age are Established as Follows

a) Reference Age of 62 Years: 9.8 percent for insured persons with a progressive salary system, or 8.8 percent for insured persons with a non-progressive salary system;

b) Reference Age of 60 Years: 10.8 percent for insured persons with a progressive salary system.

2. After Reaching the Reference Age, the Contribution Rate for Insured Persons is 8.8 percent.

1. PKWAL is an entity of public law endowed with legal personality. It is organized in the form of pension funds created from within its ranks (hereinafter: PF).

2. Its registered office is located in Sion.

3. It is registered in the commercial register. It is represented by dual collective signature.

4. PKWAL ensures the occupational pension provision for the state personnel of the canton and the affiliated institutions in accordance with the Federal Act on Occupational Retirement, Survivors' and Disability Pension Plans.

5. It is registered in the occupational pension register and is subject to the supervision of the competent authority.

1. PKWAL is a provident institution with a superior joint body and consists of internal pension funds created from within its ranks.

2. Each pension fund established within PKWAL has its own joint board, its own regulations, and its own accounts.

3. Within the framework of this law, PKWAL initially consists of an open pension fund (OPF) and temporarily of a closed pension fund (CPF).

4. To achieve its objective, PKWAL may conclude the necessary agreements, including insurances. In this case, it is the policyholder and beneficiary.

1. PWAL establishes the performance plans and provides its retirement benefits under the defined contribution scheme.

1. PKWAL is provided with a guarantee by the State of Wallis. The principle and definition of the guarantee of the retirement benefits as described in Article 72c of the BVG are established individually for each pension fund (PK) as follows

a) the guarantee of benefits by the State of Wallis pursuant to Article 72c BVG applies exclusively to the closed pension fund (GPK). The modalities of this guarantee are regulated by a regulation of the Council of State;

b) the guarantee by the State of Wallis is not granted for the benefits of the open pension funds (OPK).

1. The full capitalization system applies to the OPK without the guarantee of the State of Valais.

2. The partial capitalization system applies to the GPK with the guarantee of the State of Valais.

1. The GPK is subject to partial capitalization in accordance with Articles 72a and 72f of the Federal Law on Occupational Retirement, Survivors' and Disability Pension Plans (BVG).

2. It is guaranteed by the State of Valais for the benefits corresponding to Article 72c of the BVG and the transitional provisions of this law.

3. Its financing plan must be approved by the supervisory authority in accordance with Article 72a of the BVG.

4. The implementation modalities of the legal guarantee by the State of Valais are established through regulations by the Council of State within the framework of the present law. The Council of State is authorized to determine the financing share of the other employers affiliated with the GPK, and the State of Valais may demand reimbursement of this share.

1. PKWAL may enter into affiliation agreements with other institutions through an open pension fund, which perform public or semi-public functions (hereinafter: affiliated institutions).

2. The affiliation is established through an affiliation agreement. The PKWAL law and the regulations of PKWAL are integral components of this agreement.

1. The bodies of the PKWAL are

a) the Board of Directors;

b) the Executive Boards of the PK;

c) the Delegates' Assembly;

d) the Directorate;

e) the Audit Office;

f) the Expert for Occupational Pensions.

1. The parity-based Administrative Board is composed of 8 to 12 members, who are appointed separately by the representatives of the employers and the insured persons of the pension fund.

2. The members of the Administrative Board are generally appointed from among the members of the pension fund's executive boards.

3. The duration of a mandate is 4 years, renewable up to a maximum of 12 years. The mandate of members elected during the course of a term runs until the end of the functional period.

4. The Administrative Board constitutes itself and, in particular, elects its president.

1. The Board of Directors is the supreme governing body. It exercises overall management, oversight, and control over administration. It has the tasks that are non-transferable and inalienable under the law, namely

a) Establishing the financing system within the limits of Article 50 Paragraph 2 of the BVG;

b) Defining the performance goals, pension schemes, and principles for the use of free funds;

c) Issuance and amendment of regulations;

d) Preparation and approval of the annual financial statement;

e) Determining the amount of the technical interest rate and other technical bases;

f) Defining the organization, specifically the administration and the status of PKWAL personnel;

g) Organization of the accounting system;

h) Determination of the insured group and ensuring information for the insured;

i) Ensuring initial and continuing education for employee and employer representatives;

j) Appointment and dismissal of persons entrusted with administration;

k) Selection and dismissal of the expert for occupational pensions and the auditor;

l) Decision on the full or partial reinsurance of the pension institution and, if applicable, the reinsurer;

m) Determining the goals and principles of asset management as well as the implementation and monitoring of the investment process;

n) Periodic review of the medium- and long-term alignment of the invested assets with the obligations;

o) Establishing the conditions for the repurchase of benefits;

p) Defining relationships with affiliated employers and the conditions applicable for the affiliation of additional employers.

2. Moreover, the Board of Directors decides by regulation on the power of representation, the creation of open pension funds or, after prior approval by the Council of State, the adoption of insureds, the determination of compensation of the bodies and their publication, as well as provisions concerning the organization of the delegates' meeting and the election mode of the boards of the pension funds and the Board of Directors.

3. The Board of Directors may assign an office, commissions, or certain members with the preparation or execution of its decisions or the supervision of certain affairs. It ensures that members are adequately informed.

4. It decides on compensation appropriate to the mandate for its members and those of the pension funds.

5. It examines and approves the following decisions of the pension funds based on the legally non-transferable and inalienable tasks

a) Asset allocation strategy of the pension funds;

b) Pension plan, contributions, and implementation of the funding system of the pension funds, particularly full capitalization for open pension funds and the application for continuation of the partial funding system for the GPK according to Article 72a BVG;

c) Affiliation agreement;

d) Annual report;

e) Budget;

f) Decisions regarding the full or partial reinsurance of the pension funds;

g) Conclusion of affiliation agreements with external institutions;

h) Designation of persons representing PKWAL with joint signature by two;

i) Remedial measures;

j) Partial liquidation.

6. The Board of Directors exercises supreme supervision over the following decisions of the pension funds

a) Use of surpluses;

b) Adjustment of pensions to price developments.

1. Each pension fund (PK) maintains a specific internal accounting with its own pension assets and liabilities.

2. Each pension fund (PK) is managed by a board that is composed equally of employee and insured representatives. The regulations may grant retirees a non-voting representation.

3. The organizational regulations of the pension fund (PK) govern the composition and appointment of the board members.

4. Once the insured members of the specific pension fund (GPK) consist exclusively of retirees, the board members of the GPK are appointed by the State Council. If the number of active insured members is insufficient for equal representation, they may decide on a proportional representation according to the active insured members' coverage capital or opt for representation by appointment through the State Council.

5. Pension funds, with the exception of those provided for in this law, are established by resolution of the board of directors after approval by the State Council, which also defines the circle of affiliated employers.

1. The board represents the pension fund (PK) in dealings with the fund administrator.

2. Within the limits of the legally non-transferrable and inalienable duties of the administrative board of PKWAL and the recognized prerogatives of the State of Valais, the boards of the PK assume the following responsibilities

a) Resolution on the regulations of PKWAL for the PK;

b) Selection of the pension and/or benefit plan;

c) Asset allocation strategy within the scope of the common assets of PKWAL;

d) Resolution on affiliation agreements;

e) Preparation of the annual report;

f) Development of the budget;

g) Decisions regarding reinsurance;

h) Resolution concerning the use of surpluses;

i) Decisions on adjustments to price developments;

j) Regularly informing the insured parties via circulars or other appropriate communication methods;

k) Designation of persons who represent the PK with collective signature authority in dealings with the administrative board;

l) Decisions according to the law and regulations in all cases not explicitly regulated;

m) Adoption of restructuring measures and the modalities required for the GPK regarding the request for continuation of partial capitalization within the framework of the State of Valais' guarantee of benefits under this law;

n) Determination that the conditions for a partial liquidation are met.

1. An employer contractually affiliated with PKWAL is attached to a pension fund and is subject to the statutory and regulatory provisions applicable to it.

2. In the event of a collective withdrawal of part of the personnel of an affiliated employer, with the exception of the State of Valais, or upon the termination of an affiliation of such an employer with the withdrawal of the retirees who are attached, PKWAL invoices the concerned employer for the exit compensation to cover the resulting share of the underfunding of the GPK or the share of the provisions and reserves of the OPK, which are part of the special financing by the State of Valais as of January 1, 2020.

3. These provisions also apply to those employers who are simultaneously affiliated with both GPK and OPK. Termination of affiliation with one fund by the employer is subject to the condition that affiliation with the other fund is simultaneously terminated. The termination of affiliation with the two funds results in the withdrawal of retirees of the affiliated employer and the invoicing of the exit compensation for the two funds at the expense of the employer.

4. PKWAL determines by regulation the modalities of execution, namely the content of the provisions regarding affiliation, the method of calculating the compensation at the expense of the withdrawing employer, as well as the payment conditions.

1. The Council of State shall establish by regulation the modalities for determining the representation of employers on the board of the Pension Fund Committee (GPK) and the Occupational Pension Committee (OPK), where the State of Valais insures its employees, ensuring appropriate representation of other employers.

1. The composition of the delegates' assembly is determined according to the modalities and principles established by the Board of Directors.

2. The delegates' assembly is elected by the insured individuals or by the staff and pensioners' associations for a duration of 4 years, with each pension fund being proportionally represented.

1. The delegates' assembly elects the representatives of the insured persons to the boards.

2. It is consulted by the board of directors in the drafting of the regulations that establish its organization and the election procedures for its members.

3. It reviews the annual report and financial statements, as well as the report of the auditing body and the certified expert for occupational pension plans.

4. It holds the right to make proposals on all matters concerning PKWAL and is informed annually by the board of directors and management about the course of business.

1. The management conducts all ongoing business and may be invited to participate in meetings of the Board of Directors and its committees, boards, and the assembly of delegates in an advisory capacity. The management appoints the employees of PKWAL.

2. The management and employees are employed according to the Code of Obligations. For occupational pension plans, they are insured with PKWAL.

3. A regulation issued by the Board of Directors determines the other duties and powers of the management.

1. The assets of the PKWAL consist of its own administrative assets, intended to cover operating costs, and the joint consolidated pension assets of the PK.

2. The administrative assets of PKWAL and the joint consolidated pension assets of the PK are formed by regulatory contributions from employers and employees, voluntary contributions from employers and third parties, as well as the investment returns of the PKWAL assets.

3. Each PK holds a share in the joint movable and immovable assets.

4. PKWAL maintains a separate account for each PK.

5. The assets and liabilities of the PK are accounted for separately. Each PK is liable only for its own liabilities and uses its assets exclusively for the occupational retirement provision of its own insured members.

**1. PKWAL manages assets in accordance with the provisions of the BVG. It ensures in particular that:**

a) the security of the investments is guaranteed;

b) the investments achieve a market-appropriate return;

c) the distribution of risks is balanced;

d) sufficient liquid funds are available.

**2. The immovable property of PKWAL may be wholly or partially held by an investment foundation for occupational pensions.**

**3. The transfer of real estate to a pension foundation is exempt from all cantonal taxes, fees, and charges.**

1. PKWAL prepares an annual balance sheet and a consolidated income statement based on the business reports of the open and closed pension funds.

2. The fiscal year is identical to the calendar year.

1. The audit firm carries out the tasks assigned to it by the BVG.

2. It reviews, in particular each year, the legality of the annual financial statements, the insured persons' accounts, the management, and the asset investments.

3. It submits a written report to the Board of Directors on the findings of its review.

1. The expert on occupational pensions carries out the tasks assigned to him by the BVG.

2. The expert regularly checks, in particular for the PKWAL as well as consolidated for the PK

a) whether the PKWAL and the PK guarantee that they can fulfill their obligations;

b) whether the regulatory provisions regarding the actuarial foundations, benefits, and financing comply with the legal requirements;

c) whether the GPK's financing plan of the PKWAL meets legal requirements.

3. After prior consultation with the boards, he submits recommendations to the board of directors, particularly regarding

a) the technical interest rate and other technical bases;

b) the measures to be initiated in case of underfunding;

c) the continuation of the financing plan for a partial capitalization of the GPK.

1. In addition to the supervision carried out by the BVG Supervisory Authority, PKWAL is subject to the supervision of the State Council within the limits of federal legislation, which is exercised by the department responsible for finance.

2. The State Council is particularly responsible for

a) supervising the long-term maintenance of financial equilibrium and the compliance with the financing plan as per Article 72a paragraph 1 BVG for the occupational pension schemes of PKWAL;

b) acknowledging the annual accounts and annual reports.