SWITZERLAND - A follow-up inquiry into the real estate management division of the Swiss public pension fund for the canton of Zurich (BVK) found no need for immediate action, but noted several "inadequacies" within the organisation's investment structure.

The CHF21bn (€16.8bn) pension fund for public servants in the Swiss canton of Zürich hit the headlines last year when its head of asset management was arrested in relation to unproven allegations of corruption.

As a result, the cantonal government ordered several external and internal inquiries into the fund, which is at the same time struggling to overcome major underfunding issues to be converted into a privately-run foundation.

As part of the of inquiries, the government also asked accounting firm BDO and legal consultant Georg Müller to look into BVK's real estate management division - a separate entity within the fund where no allegations of corruption had been raised.

In their report, the experts noted there was "no immediate cause for action" in the real estate management division.

However, they found several "inadequacies" in the organisation, such as too few staff for investment decisions and too little leeway to make new investments.

Under current regulations, BVK has to get governmental approval for any property investment beyond CHF1m, which, according to the experts, is "too restrictive" given the pension fund's size.

The experts also noted that BVK's real estate investment strategy was still lacking official government approval, which made its implementation difficult.

BDO and Müller concluded that the current governmental structure of the BVK organisation was "inappropriate" for property investments.

They urged the parties involved to speed up the process of privatising the fund as well as that of implementing the internal control system within the real estate management division.

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