mast image

Special Report

Impact investing

Sections

Swiss government agrees to cut minimum rate

SWITZERLAND- The Swiss Pension Funds Association (ASIP) has welcomed the decision of Switzerland’s Upper House of Parliament to modify its plans to cut the guaranteed minimum interest rate of second pillar pensions.

The Upper House has decided that, in future, the minimum interest rate for pension funds in the BVG second pillar system will be set according to certain criteria. These criteria will allow the authorities to take account of changes in economic conditions before fixing the minimum rate.

At the beginning July, of the Upper House created a storm of controversy when it announced that rate would be lowered from 4% to 3% in October this year. They argued that the rate, unchanged since 1985, was unsustainable in current market conditions.

The Upper House was accused of having bowed to pressure from Switzerland’s insurers. Pension funds complained that the move ignored the conclusions of a BVG Commission that favoured amore flexible approach.

Since then the Upper House has backed down significantly. Following its first closed session after the summer break, it announced that the interest rate would be lowered to only 3.25%. The new rate is based on a formula devised by the BVG Commission, which had originally argued for a new rate of 3.5%. The change of the interest rate will now enter into force on 1 January 2003.

ASIP says the main priority is to restore the confidence of the public generally and pension fund members in particular in the stability and soundness of second pillar pensions.





Have your say

You must sign in to make a comment

IPE QUEST

Your first step in manager selection...

IPE Quest is a manager search facility that connects institutional investors and asset managers.

  • QN-2546

    Asset class: Real Estate Equity Fund (non listed).
    Asset region: Europe.
    Size: Total CHF 600m, approx. CHF 100-300m per fund investment.
    Closing date: 2019-06-28.

Begin Your Search Here
<