Migros Pensionskasse (MPK), the CHF27bn (€28.6bn) pension fund for the Swiss retailer, has decided to increase the retirement age for its members (both men and women) to 65, in line with the reform of the first pillar pension system adopted last year.
By aligning MPK’s retirement age with the retirement age according to the first pillar AHV, “Migros would create incentives for people to work longer”, said chief executive officer Christoph Ryter, adding: “This can help address the labor shortage.”
The changes apply to members retiring from 1 January 2025, while for members retiring up to 31 December 2024, the retirement age of 64 for women and men continues to apply, it said.
The Swiss public voted last year to put the first pillar scheme on a more stable financial footing, increasing VAT and the retirement age for men and women to 65 years old from 2028; the same would follow for members in the second pillarpension system.
The reform enters into force on 1 January 2024, with the retirement age for women gradually increasing by three months per year, beginning one year after the reform comes into force.
MPK plans to increase the retirement age to 65 years old by three months per year from 2025 to 2028.
Ryter said the impact of the retirement age increase on Migros Pensionskasse is minimal, as retirement between 58 and 70 years old is already currently an option for members. The conversion rates to calculate pension pay-outs upon retirement will remain unchanged.
The pension fund’s board of trustees has decided to apply an interest rate on retirement savings of members of 3.75% next year, well above the minimum of 1.25% set by the government.
“However, for retirements from 2028 onwards, there will no longer be a bridging pension financed by the employer [so-called Migros AHV replacement pension], which included a temporary benefit between the current retirement age of 64 and the retirement age of 65 for men,” Ryter expalined.
“This is no longer necessary because from 2028 the retirement age for MPK will be the same as in the AHV,” he added.
MPK underlined that increasing the retirement age does not lead to a reduction in terms of pension benefits. On the contrary, people who work longer receive higher retirement benefits from MPK at the time of retirement.