Act on the Pension Fund of the Canton of Solothurn (PKG) - Purpose (PKG)

1. The Pension Fund of the Canton of Solothurn (referred to as Pension Fund) aims to provide occupational benefits to insured persons against the economic consequences of old age, death, and disability.

1. The pension fund is an independent public law institution based in Solothurn.

2. It is registered in the occupational pension scheme register.

1. The following terms have the following meanings in this Law and the regulations of the Pension Fund of the Canton of Solothurn

a) * Employers are

1. * the Canton of Solothurn for state personnel, the providers of public schools in the Canton of Solothurn for public school teachers, and the Solothurn Hospitals AG;

2. * the affiliated companies (natural or legal persons, including public corporate bodies, institutions, and foundations) that insure their entire personnel or parts thereof with the Pension Fund through a joining agreement.

b) Employees are persons who have a public-law or a private employment relationship with an employer mentioned in letter a;

c) Providers of public schools are the resident municipalities in the Canton of Solothurn;

d) Insured persons are employees affiliated with the Pension Fund as well as former employees who receive insurance benefits from the Pension Fund;

e) * The insured salary corresponds to the relevant salary minus a coordination deduction, but at least the minimum coordinated salary;

f) * The relevant salary as per this Law corresponds to the AHV-contribution-liable salary reduced by salary components that occur only occasionally. It corresponds to a maximum of eight times the upper limit salary according to the BVG;

g) * The coordination deduction corresponds to 75 percent of the maximum pension according to the Federal Law on Old-Age and Survivors' Insurance (AHVG) of December 20, 1946. In the case of part-time employment, the coordination deduction is calculated proportionally;

h) Risk insurance is insurance against the economic consequences of death and disability.

1. The pension fund conducts the mandatory occupational pension provision in accordance with the BVG.

2. It provides benefits in accordance with this law and its regulations, but at a minimum, the benefits according to the BVG.

**1. For affiliated enterprises and their insured individuals, the provisions of this Act and the same pension plan apply as for the insured individuals of employers according to § 3 paragraph 1 letter a number 1. Deviations from the following provisions can be specified in the affiliation agreement:**

a) Determination of the coordination deduction (§ 3 paragraph 1 letter g);

b) Employer contributions (§ 8);

c) Relevant salary (§ 3 paragraph 1 letter f): A lower maximum can be established. However, this must at least correspond to twice the upper salary limit according to the BVG;

d) Entry threshold (§ 5 paragraph 1): A lower entry threshold than in the BVG can be established. In this case, the provisions regarding the commencement and termination of the insurance obligation according to § 6 are applicable accordingly;

e) Supplementary insurance (§ 6bis).

**2. One or more pension plans applicable to the staff or different staff categories of the enterprise can be established in the affiliation agreement.**

**3. Contributions for pension plans recorded in the affiliation agreement are to be determined by the pension fund in such a way that there is no financial disadvantage for the employers according to § 3 paragraph 1 letter a number 1 and their employees.**

**4. Depending on the pension plan and in application of paragraph 3, a percentage discount or surcharge to the restructuring contributions contained in § 12 paragraph 2 is determined in the affiliation agreement.**

1. Insurance is provided for individuals who are employed by an employer and are subject to compulsory insurance under the BVG. The retirement age for both women and men is equal and corresponds to the standard retirement age for men according to the AHVG.

1a. Assistant and senior doctors of Solothurner Spitäler AG are not insured with this pension fund.

1b. Clearly defined groups of individuals may be excluded from insurance with the pension fund in affiliated companies as specified in the subsequent contract.

2. Employees who meet all other requirements for compulsory insurance under the BVG will also be insured even if they are employed part-time by an employer and are already compulsorily insured or self-employed in their main occupation. They have the option to waive the insurance.

**1. Commencement and Termination of Mandatory Insurance (Insurance Obligation) are Determined by Federal Law. Exceptions Remain Subject to § 5 Paragraph 1 Sentence 2.**

2. Insured individuals who continue their gainful employment after reaching the regular retirement age may extend their insurance until the end of their employment, but no longer than until reaching the age of 70. The insured salary will be adjusted to the income in accordance with § 3 Paragraph 1 Letter e, but it will not exceed the insured salary prior to reaching the regular retirement age.

1. In the supplementary insurance, individuals are enrolled who are subject to compulsory insurance under § 5 and § 6 and whose relevant salary is expected to exceed the entry threshold according to paragraph 2 for at least 3 months.

2. The entry threshold of the supplementary insurance corresponds to six times the amount of the maximum pension according to the AHVG. For part-time employment, the entry threshold is calculated proportionally.

3. The insured salary of the supplementary insurance corresponds to the relevant salary minus the coordination deduction of the supplementary insurance. The coordination deduction of the supplementary insurance corresponds to eleven twelfths of the entry threshold according to paragraph 2.

1. The funding of the pension fund is carried out through the contributions of the insured individuals and the employers, as well as through the investment returns.

2. The contributions, together with the investment returns, must ensure that the pension obligations are fully covered.

1. For the financing of retirement credits, employers shall make the following contributions

a) For insured persons aged 25 to 34: 6 percent of the insured salary;

b) For insured persons aged 35 to 44: 9 percent of the insured salary;

c) For insured persons aged 45 to 54: 12 percent of the insured salary;

d) For insured persons aged 55 until reaching the statutory retirement age: 17 percent of the insured salary.

1bis The age specified in the listing in paragraph 1 corresponds to the difference between the calendar year and the birth year of the insured person. The contribution is made until the insured person reaches the statutory retirement age. In the case of continued insurance pursuant to § 6 paragraph 2, employers continue to make a contribution of 17 percent of the insured salary for the financing of retirement credits.

1ter For the financing of risk benefits in the event of disability and death of active insured persons, employers make a contribution of 1.00 percent. This contribution is made at most until the regular retirement age for men as defined by federal law is reached.

2. The government council may decide on additional employer contributions of up to 2 percent of insured salaries, specifically in the following cases

a) ...

b) Due to a significant increase in the number of disability cases;

c) Following an increase in the national consumer price index by more than 3 percent per calendar year for at least two consecutive calendar years.

2bis Within the framework of supplemental insurance, employers make the following contributions to the insured salary for the persons included according to § 6bis

a) From age 25 until the end of the month following the completion of the 70th year of age, a contribution of 2.5 percent for the financing of retirement credits.

b) At most until the completion of the 65th year of age, a contribution of 0.25 percent for the financing of risk benefits.

3. The government council regulates the contribution payments for retirement benefits, risk insurance, pension adjustments, and inflation developments for the duration of unpaid leave.

4. The employer owes the pension fund the total contributions, which must be calculated on a monthly basis. The employer deducts the employee's share from the salary payment.

1. Employers pursuant to § 3 paragraph 1 letter a number 1 participate in the financing of AHV replacement pensions, which are provided from the completion of the 60th year of age until no later than the standard retirement age of the AHV.

2. The participation amounts to 4.5 percent for each full contribution year when receiving a full AHV replacement pension, but no more than 45 percent of the maximum AHV old-age pension.

3. In the case of a partial AHV replacement pension, the participation is reduced accordingly.

4. The costs must be transferred at the beginning of entitlement to the pension fund.

1. The Administrative Commission shall issue a pension regulation. In particular, it shall regulate the following benefits

a) Retirement benefits;

b) Survivors' benefits;

c) Disability benefits.

1. The insured person is entitled to a portability benefit if their employment relationship is terminated before the occurrence of a covered event and they leave the pension fund.

1. If the coverage ratio of the pension fund is less than 100 percent on the reporting date, there is an underfunding.

2. In the event of an underfunding and if other measures to rectify it within a reasonable period are likely to be insufficient, employers shall make the following recovery contributions on the insured salaries starting from January 1 of the following year

a) if the coverage ratio is 98 percent or higher, at least 1.6 percent, maximum 2.4 percent;

b) if the coverage ratio is 95 percent or higher, at least 2.4 percent, maximum 3.2 percent;

c) if the coverage ratio is 90 percent or higher, at least 3.2 percent, maximum 4.8 percent;

d) if the coverage ratio is below 90 percent, at least 4.8 percent, maximum 6.4 percent.

2bis. The percentage recovery contributions under the supplementary insurance amount to one quarter of the percentages according to paragraph 2 letters a-d and are made on the insured salaries of the supplementary insurance.

3. The administrative commission decides on the measures to be taken within the ranges specified in paragraph 2 letters a-d, whereby the recovery measures for the supplementary insurance must be carried out in accordance with paragraph 2bis. The actively insured persons shall, in principle, bear equally high recovery burdens as the employers for the restoration of the pension fund, with any interest shortfalls on retirement assets under the minimum interest rate according to BVG being credited against the recovery burden of the actively insured persons.

4. If the measures in accordance with paragraphs 2 and 3 prove to be insufficient, a contribution can be levied from the pensioners within the framework of federal legal possibilities to remedy the underfunding.

5. If the measures according to paragraphs 2 to 4 prove to be insufficient, the pension fund may undercut the minimum interest rate according to BVG during the period of underfunding within the framework of the federal legal possibilities in the shadow accounting according to BVG.

1. The reference date for determining the estimated coverage ratio shall be September 30.

2. The rehabilitation measures shall be decided for each following calendar year from January 1 to December 31.

3. If an estimated coverage ratio of 100 percent is reached on September 30, the rehabilitation measures shall be discontinued from January 1 of the following year.

1. Free assets may only be reported once the fluctuation reserve has been accumulated to its target value.

1. The bodies of the pension fund are

a) the management commission;

b) the supervisory authority;

c) the expert in occupational pension schemes.

1. The Administrative Commission consists of 14 members and a representative of the retirees who has the right to submit motions but does not have voting rights.

2. It is composed equally of representatives from

a) the insured individuals;

b) the employers.

3. The representatives of the employers in the Administrative Commission include

a) four members as representatives of the State;

b) two members as representatives of the sponsors of public schools;

c) one member as a representative of the affiliated members.

4. The government council selects the representatives of the employers, except for the representatives of the sponsors of the public schools, who are designated by the Association of Solothurn Municipalities.

5. The chairpersonship alternates for each term between a representative of the State and a representative of the employees. When a State representative chairs, the vice-chairperson must be chosen from the employee representatives. When an employee representative chairs, a State representative serves as vice-chairperson.

1. The Administrative Commission is the supreme body of the Pension Fund. Its duties are determined by federal law.

1. The competent supervisory authority exercises supervision within the meaning of the BVG.

1. The supervisory authority and the expert for occupational pensions fulfill their duties in accordance with federal law as well as professionally recognized principles and guidelines.

1. Employees of the pension fund are employed under public law.

2. The remuneration of the employees is based on the principles applicable to cantonal employees. Specifically, the salary classes applicable to cantonal personnel, including their upper limits, are binding for the PKSO.

1. The Act on Legal Protection in Administrative Matters of November 15, 1970, applies mutatis mutandis.

1. The Insurance Court adjudicates disputes between the fund, employers, and beneficiaries concerning occupational benefits in litigation proceedings. The jurisdiction of the supervisory authority remains reserved.

2. Before the insured person files a lawsuit, they must communicate the claim and the reasons to the pension fund in writing. The pension fund shall respond to the claim within 60 days.

1. The Pension Fund shall be fully funded as of the cut-off date of January 1, 2012. The Canton of Solothurn and the affiliated enterprises shall assume the deficit as reported in the financial statements of the Cantonal Pension Fund as of December 31, 2011, amounting to 1,092,853,979 francs. For the period from January 1, 2012, to December 31, 2014, the minimum interest rate according to Article 15 paragraph 2 of the BVG is owed on the deficit. If the deficit reported by the Pension Fund in the balance sheet as of December 31, 2014, without considering the retroactive funding, exceeds the deficit as of December 31, 2011, including minimum interest, the Canton of Solothurn shall make a one-time payment to the Pension Fund covering the difference to the deficit as of December 31, 2011, including minimum interest. The principles outlined in the following paragraphs 2 to 4 shall apply to the balance sheet as of December 31, 2014.

2. For the valuation of the assets in the balance sheet, the accounting principles according to Swiss GAAP FER 26 shall apply.

3. For the provision of the pension capital of the actively insured persons, the total amount of vested benefits is decisive. For the provisions concerning the pension capital of retirees, the present values shall be calculated based on the technical principles VZ 2010, periodic table, with a technical interest rate of 2.5 percent. The present values shall be increased by 0.5 percent per year starting from January 1, 2012, to account for the increase in life expectancy. The inflation allowances on pensions shall be capitalized in the same manner as the pension capital of retirees and added to the pension capital of retirees.

4. The following applies to the technical provisions

a) the risk fund amounts to 1.5 percent of the pension capital of the active insured;

b) the inflation fund shall be dissolved.

1. The portion of the shortfall that must be assumed by the affiliated enterprises corresponds to the value calculated as of December 31, 2014, according to the affiliation contract or pursuant to paragraph 2.

2. Affiliated employers whose affiliation contract was not preceded by an affiliation contract terminated as of December 31, 1994, must contribute to the financing of the shortfall in an amount corresponding to the necessary buy-in pursuant to § 8 paragraph 2 letter b of the Partial Liquidation Regulations of the Cantonal Pension Fund Solothurn dated March 19, 2007, in the event of the termination of the affiliation contract as of December 31, 2014. This is based on the balance sheet pursuant to § 22 paragraphs 2 to 4.

3. After deducting the portion of the shortfall attributable to the affiliated enterprises, the remaining shortfall results. This is to be borne by the Canton of Solothurn.

**1. The Canton of Solothurn and the affiliated enterprises shall pay the pension fund the amount referred to in § 23 during the period from 2015 to and including 2054 in the form of annual annuities payable in arrears. The shortfall shall bear interest at a rate of 3 percent. The Canton of Solothurn shall provide the security in accordance with Article 58 of BVV 2 for the outstanding debt on the annuities of the affiliated enterprises. The Canton and the affiliated enterprises may reduce the annuities through lump-sum payments in accordance with § 26.**

**2. Solothurn Hospitals AG and the providers of public schools shall contribute to the pension fund during the period from 2015 to and including 2054 an amount of 3.6 percent of the insured salaries of their insured persons in accordance with § 8 paragraph 1.**

**3. The Canton of Solothurn shall make the following contributions and annuities to the pension fund during the period from 2015 to and including 2054:**

**a) a contribution of 3.6 percent on the insured salaries of its insured persons in accordance with § 8 paragraph 1;**

**b) a variable annuity payable annually in arrears, corresponding to the canton’s portion of the annuity in accordance with paragraph 1, which is not financed by the contributions according to paragraph 2 and paragraph 3 letter a.**

**4. The Executive Council shall report annually to the Cantonal Council on the expected financial burden on the canton for the full funding of the pension fund in the integrated task and financial plan separately.**

1. Contributions in accordance with § 24 paragraph 2 and paragraph 3 letter a shall be no higher than necessary to match the total annuity of the canton according to § 24 paragraph 1. At the end of the calendar year, any overpaid contributions shall be adjusted to the benefit of the canton. The adjustment in favor of the canton shall not exceed the contributions it made according to § 24 paragraph 3 letter a. Only when the contributions of the canton pursuant to § 24 paragraph 3 letter a and the contributions of Solothurn Hospitals AG according to § 24 paragraph 2, considering the adjustments, amount to zero francs, will there also be an adjustment in favor of the public school carriers based on the insured payroll of the respective calendar year.

2. The Government Council may first reduce the contribution rate of the canton mentioned in § 24 paragraph 3 letter a of 3.6 percent, and thereafter also the contribution rate of Solothurn Hospitals AG and the public school carriers mentioned in § 24 paragraph 2 of 3.6 percent, if it is foreseeable that the total annuity of the canton pursuant to § 24 paragraph 1 will be covered by the reduced contributions, taking into account a safety margin. A reduction in the contribution rate of the public school carriers will only occur once the canton’s contribution rate is zero percent. If, despite the safety margin, the reduced contributions are insufficient, the reduction will be reversed as needed, and the corresponding contributions will be invoiced.

1. The Canton of Solothurn and the affiliated enterprises may settle their debt to the pension fund, in whole or in part, through lump-sum payments instead of annuities. These payments shall be made at the beginning of each calendar year and correspond to the capital value of the amount by which the annuity is reduced, calculated with an interest rate of 3 percent.

1. The Government Council shall submit a report to the Cantonal Council every four years, which shall at least demonstrate the following

a) Remaining debt of the Canton towards the pension fund;

b) Development of the Canton's annuity;

c) Development of the beneficiaries' contribution and their usage.

2. The Government Council may propose to the Cantonal Council a new regulation of task assignments and their financing at the expense of the municipalities to finance the annuity from the share of the deficit that it covers for the municipalities. The deficit that the Canton covers for the municipalities amounts to 343 million Swiss francs. This share is derived from the ratio of the insured payroll as of January 1, 2014.