The pension fund for the Swiss canton of Vaud (CPEV) could consider postponing the reform of the pension plan for its members scheduled for 2023 for one or two years.
The board of directors of the pension fund would study the possibility of delaying the new pension scheme on the back of positive financial results achieved in 2020 and in 2021, it said.
CPEV has recorded an overall performance of 6.6% at the end of September this year, up from 6.5% at the end of June. Its investments have returned 5.0% at the end of 2020.
The board of directors will decide whether it is possible to postpone the measures planned for 2023 by looking at end-of-year results on 31 December.
In case it decides to postpone the reform of the current pension plan, the board will determine when the new measures will come into force to ensure that it meets the requirements set by federal law.
The new pension plan was defined in 2018 to enter into force in 2023, maintaining the current conditions for pensions until 31 December 2022.
The new plan foresees an increase of the minimum retirement age by two years, from 63 to 65 years old, from 1 January 2023, while retaining the defined benefit (DB) scheme and a maximum level of pension of 60% of the annual wages for future retirees.
The DB scheme will carry a technical interest rate of 2.50% with the new plan compared with 3.25% applied to the current pension plan. The rate of contribution will instead remain stable after the change for fund members at 10%, and for employers at 15%.
The pension fund plans to put in place compensatory measures to mitigate the impact of the increase in retirement age and the period of contribution to the pension fund, if the plan comes into force as validated by the supervisory authority in 2018, it said.
CPEV has decided to change pension plans to meet a 80% funding ratio necessary to pay pension promises. Projections have shown, in fact, that without changes CPEV would not be able to achieve a 80% funding ratio on time to fund its pension promises.
Every five years CPEV must prove to the supervisory authority its ability to finance pension promises through a financing plan and achieving a funding ratio of 80% in the long term by 2052. The next deadline to submit its funding plan is in 2022.
CPEV will carry out additional analyses and projections during the first months of 2022 on the basis of its returns on investments recorded at the end of this year.
Meanwhile, it is planning to support the transition from the current pension plan to the new pension plan, on 1 January 2023 or later, with measures ensuring that the pensions provided under the new scheme are not lower than the level of pensions set at the time of the reform.