The Swiss Parliament is considering changes to BVG, the law determining occupational provision. Under the Swiss direct contribution system the conversion rate of capital into pension is independent of market conditions at retirement. At present the rate is 7.2%. The new proposals will gradually cut this to 6.65% by 2016.
“7.2% is quite a challenge for pension funds given people are living longer,” says Gioacchino Puglia, investment consultant at Watson Wyatt, in Zurich. The government is also planning to raise the retirement age for women from 62 to 65 and to force all pension funds to allow early retirement. It is also considering making it law for all pension funds to offer pension holders the right to claim their pension in a lump sum.
Gregor Ruh, head of the secretariat at ASIP says the debate will be drawn out and he doesn’t expect new legislation to be passed for the next three years.