The recommendation of the federal commission for occupational pensions, BVK-Kommission, to keep the minimum interest rate on pension savings unchanged at 1.25% in 2025, has left pension funds vulnerable to attacks from unions accusing schemes of losing focus on the financial situation of their members.
The Swiss Federation of Trade Unions, SGB USS, has demanded a higher minimum interest rate “because the returns [of pension funds] are bubbling,” it said in a statement.
Last year, Swiss pension funds returned 5.1% on average, and 6.6% year-to-date in 2024, according to the latest Pensionskassen-Monitor published by Swisscanto.
“The pension funds’ high profits on investments don’t reach the members,” the union added, promising to press the Federal Council that it will have the last word, pushing to revert the recommendation by BVK-Kommission.
Higher profits and a low interest rate on pension savings “damage the trust of the members in the second pillar [pension system],” it continued.
Union Travail.Suisse expressed disappointment with the decision taken by BVK-Kommission. The union had called for a moderate increase of the minimum interest rate to 1.5% to benefit pension fund members.
The current minimum interest rate, close to the country’s inflation level, means that retirement savings of many members will lose value, the union added.
Swiss unions continue to accuse pension funds of “swimming in money” while interest rates on pension savings go down, and the conversion rate used to calculate pension payouts could be cut if the reform of the second pillar pension system is approved through a vote on 22 September.
According to SGB, BVK-Kommission’s backers of the second pillar reform “showed their true face”, noting that only by rejecting the reform in the referendum will pension fund members be protected.
The BVG-Kommission has recommended the Federal Council to hold the minimum interest rate at 1.25% because, even though financial markets have recovered after the setback experienced in 2022, and the financial situation of pension funds has improved, interest rates have fallen.
The BVG-Kommission did not reply to a request for comment.
The minimum interest rate applies only to pension assets of members earning between CHF22,050 and CHF88,200 annually, the so-called mandatory part of the occupational pension insurance — BVG Obligatorium.
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