The Swiss Federal Council (Bundesrat) has today decided to keep the minimum interest rate applied on pension assets in the second pillar pension systewm unchanged at 1% in 2023 as yields on bonds continue to rise.
The increase of yields on Swiss bonds played an essential role in the decision of the Federal Council to maintain the minimum interest rate unattached, IPE understands.
The three-year Swiss bonds yielded 0.74% in September, up from -0.04% in August and -0.55% a year ago, while the 10-year bonds yield 1.14% from -0.07% one year ago, according to the Swiss National Bank (SNB).
According to the law, the Federal Council sets the minimum interest rate for pension assets looking at bond yields and returns on equities and real estate investments.
Equities and real estate developed positively in 2021, while there were significant setbacks this year.
According to the Credit Suisse Pensionskassen, Swiss pension funds recorded losses of 2.47% in the third quarter of this year and 11.71% year-to-date.
July was the only positive month in terms of performance (2.89%), followed by August with -1.61% and September -3.66%, it added.
Equities recorded the steepest loss with -1.58% in the third quarter, with Swiss equities returning -0.66% and foreign equities -0.93% in Q3, and real estate -0.03%.
Keeping the minimum interest rate at 1% is justified despite the currently difficult situation on the markets, the government said in a statement today, adding that meanwhile yields on Swiss federal bonds has risen significantly.
The Federal Council reviews the minimum interest rate at least every two years, and it will conduct a review next year.
The minimum interest rate – Mindestzinssatz – is the rate applied by Pensionskassen on the retirement assets of the member. The government set the minimum interest rate at 1% also in 2020 and 2021.
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