2023-11-01 10:31:54
Federal Council
Bern, 01.11.2023 – The Federal Council increases the minimum interest rate for occupational pensions by 0.25 points in 2024, bringing it to 1.25%. It decided so at its meeting on November 1, 2023. This rate determines the minimum interest at which the retirement assets of the compulsory scheme must be paid in accordance with the federal law on occupational pensions (LPP).
Under the law, the determining factor for setting the minimum interest rate is, in particular, the evolution of the yield on Confederation bonds as well as, in addition, that of shares, bonds and real estate.
The interest rate on Confederation bonds increased significantly in 2022. For ten-year bonds, it rose from -0.13% at the end of 2021 to +1.09% at the end of September 2023 The rise in interest rates is particularly marked for short-term investments. The key rate of the Swiss National Bank (SNB) is currently at 1.75%.
Still negative last year, the performance of stocks and bonds has clearly improved this year. The Swiss Performance Index of equities lost 16.5% in 2022. But at the end of September 2023, it had risen by 4.6%. The performance of bonds was clearly negative in 2022 due to the rise in interest rates. The 2023 recovery has, to date, helped to attenuate this trend. The Swiss Bond Domestic AAA – BBB index lost 12.9% in 2022. But at the end of September 2023, it had risen by 3.9%. The real estate market, for its part, has experienced uninterrupted positive development.
We must also keep in mind the excellent performance recorded by the markets in 2021. Furthermore, at the end of August 2023, the degree of coverage of provident institutions without state guarantee was around 110%, a value close to that at the end of 2019 ; it is thus above its long-term average. On the basis of these findings, the financial situation of the pension institutions can be described as stable.
The current level of inflation and the resulting reduction in purchasing power are not without consequences for the 2nd pillar. However, as interest rates have also risen, the expected return on investments and the restructuring capacity of pension institutions have improved significantly. In view of the stable situation of pension institutions and the increase in interest, a slight increase in the minimum interest rate is indicated despite the unfavorable development of the financial markets in 2022.
On September 4, the Federal Occupational Pension Commission also came out in favor of increasing the rate to 1.25%. The social partners defended divergent positions. While the unions demanded 2%, the Federation of French-speaking companies and the Swiss Society of Commercial Employees recommended 1.5%. Finally, if the Swiss Peasants’ Union and the Swiss Union of Arts and Crafts argued for a rate of 1%, the Swiss Employers’ Union proposed 0.75%.
Address for sending questions
Joseph Steiger
Financing of professional pensions
Federal Social Insurance Office
+41 58 462 94 18
joseph.steiger@bsv.admin.ch
Auteur
Federal Council
1698836014
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