Almost two thirds of the members of the BVG commission have voted in favour of keeping the Swiss second pillar’s minimum interest rate at 1.75% for 2015.

The decision comes after the commission last year voted to raise the rate – which is the level Swiss Pensionskassen have to guarantee under the BVG law governing the mandatory occupational pensions sector – from 1.5% to 1.75%. 

However, a year ago the yield of a Swiss 10-year government bond stood at the much higer rate of 1%, compared to 0.5% at the beginning of September 2014.

Nevertheless, the commission said the “on the whole satisfactory situation on the financial markets” as reason for the decision to keep the rate at the current level.

Some members had proposed a lowering to 1.5% based on the calculations on the minimum expected return the commission uses as the basis for its suggestions to the government.

Six members instead voted in favour of raising the rate to 2%, a demand supported by Swiss unions which have demanded a higher minimum rate for years.

Over the last few years, the Swiss government has followed these non-binding recommendations almost without exception.

Part of the current reform package, “Altersvorsorge 2020”, negotiated by the authorities would include a change to the approach of setting the minimum interest rate.

In future, the government wishes to set it at year end based on actual returns rather than basing the rate on estimates and agreeing it in advance.