A modern pension scheme
In 2012, we changed from a defined-benefit to a defined-contribution pension scheme for the Personnel Pension Fund Foundation of Liechtensteinische Landesbank AG. As a consequence, we have been able to ensure the continued existence of a financially sound and attractive pension scheme by addressing demographic, social and economic developments early on. New, on the one hand, is a higher covered salary for employees on low incomes; on the other hand, increases in savings contributions result in more retirement assets. Every employee can choose from three savings plans. Those employees who have not paid into a pension fund throughout their working life or have not always lived and worked in Liechtenstein still have the option of buying into the Personnel Pension Fund Foundation of the Liechtensteinische Landesbank. Pension contributions have been fully tax-deductible since 2011 for persons living in Liechtenstein.
The defined-benefit pension scheme with a fixed technical interest rate of 3.5 percent proved to be too inflexible for the pension fund. It was hardly able to react to the ups and downs on the capital markets following the financial market crisis. The liquidity ratio dropped in reaction to a return on investment of under 4 percent. As at 31 December 2011, the funding deficit stood at approximately CHF 12 million. As the employer, Liechtensteinische Landesbank AG cushioned the changeover to a defined-contribution scheme for insured contributors by investing over CHF 25 million in the realignment of the pension fund. The new concept for the company pension scheme is both flexible and sustainable and in keeping with social changes. As at 1 January 2013, the pension fund started the defined-contribution scheme with a 105 percent liquidity ratio due to positive developments in the return on investment and the writing back of allocated provisions that are no longer required.