SWITZERLAND- The Swiss pension fund association, ASIP, which represents Switzerland’s company schemes, is opposing plans to lower the minimum level of mandatory supplementary pension coverage. It claims the move will result in “mini pensions”.

Current LPP/BVG legislation mandates minimum levels of supplementary pensions coverage for all employees with annual earnings of at least SFr 3090 above a ceiling of SFr 24,720 – the social security offset.

Now the national advisory commission for social security and health has recommended that this ceiling should be lowered to SFr 12,360. This recommendation will be considered at a special session of the body that is currently revising the LPP/BVG.

ASIP argues that the costs of lowering the ceiling would not justify the pay-out. It estimates that someone earning SFr3,090 above the new threshold of SFr12,320 would receive a pension of only SFr88 a month after 40 years of contributions.

It calculates that, depending on earnings, the employee and the employer would have to pay in between SFr13 and SFr26 a month, to which administration costs would be have to be added.

The ASIP points out that many pension funds have already lowered the BVG ceiling on their own initiative, and that there is no need for a lower mandatory ceiling.

However, it recognises that there is political pressure to bring more people into Switzerland’s supplementary pensions system, and is proposing a compromise of minimum annual earnings of SFr 6,180 above a ceiling of SFr 18,360.