Swiss pensions commission calls on government to maintain rates
SWITZERLAND - The commission of industry experts on the Swiss second-pillar law BVG has recommended that the government keep the minimum interest rate at 1.5%.
The commission reviews the market regularly to determine whether or not the rate needs adjusting.
According to a statement, some commission members called for a further rate cut to 1%, while others demanded an increase to 2.5%.
Eventually, 13 members voted in favour of keeping the rate at the current level and one against, with three members abstaining.
The commission said the decision to keep the rate at 1.5% was made based on "the uncertain situation, the high volatility on the financial markets and the large number of underfunded pension funds" in order to ensure stability.
It added: "Given that, currently, there is no inflation, and that the Swiss consumer price index is negative (-0.7%), a minimum interest rate of 1.5% constitutes an appropriate real interest rate."
The final decision on the minimum interest rate lies with the government, which so far has always followed the BVG commission's recommendation.
However, a government report on the state of the second pillar also re-ignited the debate on whether the minimum interest rate should be set by the government at all.