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Asip attacks Swiss plans to 'sweeten' conversion-rate cut

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  • Asip attacks Swiss plans to 'sweeten' conversion-rate cut

SWITZERLAND - Hanspeter Konrad, managing director at Swiss pension fund association Asip, has attacked government proposals to soften the blow of an additional conversion-rate cut by making "compensation" payments from the first pillar.

In a binding referendum last March, nearly two-thirds of Swiss voters (73%) rejected an additional cut in the so-called Umwandlungssatz - the conversion rate for second-pillar pension funds.

Yet the government and a number of independent experts have agreed that further rate cuts are necessary.

They have also said that any future rate changes should be linked with some sort of compensation to ensure that the financial impact on pensioners is not too harsh.

One of the points currently being discussed - apart from a basic pension that increases when the return of a Pensionskasse increases - is a compensation payment from first-pillar fund AHV for people closer to retirement.

At a recent pension fund conference in Zurich, however, Konrad said: "This is something I oppose out of principle, and the ASIP will be speaking out against this measure. These two pillars must not be mixed."

He added that the AHV itself would have a hard time financing all its liabilities in future.

The question of the Umwandlungssatz will be one of the main issues in a report commissioned by the government to offer a comprehensive review of the second pillar.

The pensions industry will have approximately two months to comment on the report, which is expected by the end of this year.

Konrad previously told IPE that the industry had "great hopes" for the report, which will cover all aspects of the mandatory pension system.

Judging by the first drafts published, it seems the government has answered Asip's wish to "prioritise the most pressing issues" by tackling the "too high" conversion rate, as Konrad put it.

For more about the Umwandlungssatz and other aspects of the Swiss second pillar, see in IPE's December issue.

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