ASIP slams Swiss government over guarantee cuts
SWITZERLAND- The proposal to lower Switzerland’s guaranteed minimum interest rate for mandatory occupational pensions from 4% to 3% has provoked widespread opposition from pension funds, employers and political parties.
The upper house of parliament’s decision, which will affect more than three million members of the BVG/LLP second pillar scheme, was made in response to deteriorating stock market conditions.
However, the Swiss Pension Fund Association (ASIP) said: “The decision is over-hasty and the solution inappropriate”. It said the government should wait for the results of the inquiry into possible changes to the rate by the Federal Office for Social Security (BSV) which is expected in October.
“Pension fund investments are typically long-term, so that for the evaluation an accordingly longer time horizon their net yield is necessary,” ASIP said in a statement, “Therefore it is not to be countenanced that the minimum interest rate should be changed in such a manner at short notice.
“That does not mean that the association necessarily opposes adjustments. But it does require transparency, and principles and rules that are comprehensible to all.”
In particular, ASIP, wants to know what criteria will be used to decide whether to raise the minimum interest rate again when markets improve. It is worried that these could be the more pessimistic short and medium term prospects.
The Swiss Employers Association has also called for more transparency in the way the calculations are done. It said that the reserves of pension funds were less affected than the reserves of insurance fund, and that the government should take a more flexible approach.
The association also said that there must be no link between lowering the minimum rate and lowering the transformation rate - the guaranteed percentage of accrued contributions that is paid out as a retirement pension under the BVG/LLP scheme.
The rate is currently 7.2% , but in a package of changes to the BVG/LLP scheme contained in a federal government bill, it is proposed to lower this to 6.65% to take account of longer life expectancy
“It is inadmissible to link the lowering of the BVG guaranteed interest rate with the question of the lowering of the transformation rate,” the association said.
Meanwhile the Social Democratic Party (SP) has called for a special session of the National Council before any decision is taken They said the decision had been rushed simply to satisfy the lobbying of the insurance companies.