The Swiss government has decided to start a consultation on the introduction on new accounting rules at Compensiwss, the public institution managing Switzerland’s first pillar social security funds AHV, IV and EO.
The consultation will last until 16 February 2022 and the new rules are scheduled to come into force on 1 January 2025.
The accounting process at Compenswiss would be based in the future on the International Public Sector Accounting Standards (IPSAS). The new regulations will also have an impact on Compenswiss’ investment activities.
Under the new accounting rules, Compenswiss will have to use a different method to report on the investment category of “direct loans”, based on whether the loan will be held until the end of the term of a contract.
Moreover, contributions not yet invoiced to the AHV, IV and EO funds should be counted as an asset; outstanding obligations for benefits not yet billed should be reported as debt.
This applies in particular to IV benefits, which are currently only accounted for at the time of payment.
Pensions are considered liabilities if a member notifies the pension scheme after reaching retirement age and it isn’t paid out before the end of the year. The same applies to deferred old-age pensions.
Claims for maternity allowances are also to be accounted as debt if the compensation is not paid before the end of the year.
Interest rate kept at 1%
The Swiss government has decided to keep the minimum interest rate paid on occupational pensions at 1% for 2022.
For the third year in a row the interest rate remains unchanged, based on the positive development of financial markets, it said.
The minimum interest rate depends on yields on bonds and returns on equities and real estate investments. It applies to pension savings accumulated on wages in the range of CHF21,510 (€22,022)-86,040 per year, corresponding to the mandatory part of the occupational pension insurance.
The yield on 10-year federal bonds remained low at -0.53% at the end of 2020 and -0.17% at the end of September 2021, the government said in the note.
The performance of equities, bonds and real estate improved overall in 2020, although amid a volatile environment, and stayed positive in 2021.
For equities, the Swiss Performance Index was up 3.8% in 2020 and 12.9% in 2021 as of the end of September. The performance of bonds was slightly positive in 2020, but weakened this year due to the rise in interest rates. The performance on real estate investments continued to be “very positive”, it added.
In August, the federal commission for occupational pensions, BVG-Kommission, spoke in favour of an interest rate of 1%, above the 0.75% suggested last year, on the back of a positive momentum on the financial markets and the Pensionskassen‘s funding ratio at the highest level since 2004, the commission’s president Christine Egerszegi-Obrist told IPE.
Unions, however, demanded an interest rate at 1.25%, while the majority of employers’ representatives in the commission sided in favour of 1%, with the exception of the Swiss employers’ association, which voted in favour of a 0.4-0.5% interest rate.
Switzerland commits to fight against climate change in developing countries
Switzerland is financing the UN Adaptation Fund to help communities in developing countries that are vulnerable to climate change with a further CHF10m for the period 2022–2024.
The Adaptation Fund has committed over $850m to date for climate change adaptation and resilience projects and programmes.
Switzerland is also committing CHF8m to the Climate and Clean Air Coalition (CCAC) for the period 2022–2025, CHF9m to the Least Developed Countries Fund for the period 2020–2022 and $16m to the Climate Investment Fund. It will deploy close to CHF10m to the High Impact Partnership for Climate Action set up by the European Bank for Reconstruction and Development.
Swiss President Guy Parmelin, who represented the country at the World Leaders Summit at the UN Climate Change Conference COP26 in Glasgow, encouraged all countries to do more to fight global warming.
He said: “I call on all countries, especially the major emitters, to aim for climate neutrality by 2050. However, that is not going far enough; these long-term objectives must be translated into short-term action. I therefore call on all countries to submit ambitious climate goals for 2030,” he said.
Switzerland plans to halve its greenhouse gas emissions by 2030 and to become climate neutral by 2050.