SWITZERLAND - The Swiss pension fund association ASIP is "hoping for a mood swing" in public opinion, just days before the Swiss referendum on the pension conversion rate, its president Christoph Ryter has told IPE.

Swiss voters will decide on Sunday 7 March whether they want the conversion rate used for calculating pension payouts from accrued assets to be lowered to 6.4% by 2016. (See earlier IPE story: Swiss pensions could be 131 days from fresh conversion)

The rate is currently set at 7% for men and 6.95% for women and is already set to decrease to 6.8% for both sexes by 2014, but critics want to prevent further cuts.

Ryter pointed out that the current mood among the population was not in line with ASIP's argument: Pensionskassen will get into trouble over the long-term if the conversion rate is not lowered, as people are living longer.

A month ago, critics commissioned a poll in which only 12% of respondents said they would vote for a further cut in the conversion rate, while 40% said they will vote no and 39% said they were uncertain.

"Of course, we are hoping for a mood swing but it will be very difficult," said Ryter.

Critics have campaigned with the word "Rentenklau", which translates as "pension theft" and argued Pensionskassen should be lowering their administration costs instead of the conversion rate.

A handful of pension funds have themselves backed the "No" vote but Hans-Peter Konrad, director of the ASIP, explained many of those are so-called "enveloping" funds which manage both mandatory contributions as well as money paid in above the legal minimum level, for which Pensionskassen can choose a lower conversion rate.

According to consulting firm Towers Watson, the current average conversion rate for all second-pillar money from the major listed companies is approximately 6.6% for men and 6.5% for women. (See earlier IPE story: Swiss banks pay most into pension plans - Towers Watson) 

Should the Swiss vote "No" on Sunday, the conversion rate is still likely to be cut further, albeit the change will be made at a later point in time as the Swiss government regularly has to check whether the current rate level is still appropriate to new longevity tables and income level changes.

Konrad pointed out that this would lose the Swiss second pillar precious time needed to ensure its sustainability.

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