SWITZERLAND – Credit Suisse’s life and pensions arm Winterthur has cut the amount it will pay out to Swiss beneficiaries in a revamp that it says will put employee benefits on a more sustainable footing.

Under the plan, Winterthur will cut the rate at which occupational scheme members’ capital is converted to a pension from its present “too high” rate of 7.2%.

The conversion rate will fall to 5.454% for women and 5.835% for men. The so-called “extra-mandatory” benefits are those over and above statutory benefits.

It called the changes “unavoidable”.

“For some years already, the current conversion rate of 7.2% has been too high,” Winterthur said in a statement. “It has not been adjusted since the system of mandatory occupational benefits was first introduced in 1985, despite the fact that life expectancy has increased since then and continues to rise.”

“The Winterthur model offers our customers and their employees a sustainable and comprehensive occupational benefits solution that is predictable and financially viable,” said Ruedi Hefti, head of Winterthur Life, Switzerland.

The cut was “an alternative to introducing additional contributions to cover life expectancy levels that have been increasing for years”.

Other changes include a distinction between mandatory and extra-mandatory insurance, while foundations’ board of trustees will be expanded to include employer and employee representatives, as well as Winterthur representatives.

The changes will come into force at the start of next year.

Yesterday Winterthur said it signed an agreement to sell its Italian insurance operations to Unipol for 1.5 billion euros in cash.