BERN. From 1 January 2027, Swiss pension funds must credit at least 2 per cent a year on the mandatory part of occupational savings. The rate today is 1.25 per cent, and it has been since 2024. The Federal Council set the new floor at its meeting on 4 November. On a mandatory pot of CHF 100,000, the legal minimum rises from CHF 1,250 a year to CHF 2,000. On CHF 200,000, it rises from CHF 2,500 to CHF 4,000.
The minimum interest rate is not the pension itself, and it is not the conversion rate that turns a pot into a monthly payment. It is the floor on how fast the mandatory savings of people still at work must grow. Funds may pay more. Many already do. The Federal Social Insurance Office puts the average effective credit in 2025 at 4.6 per cent. The law’s floor is there for the funds that do not have that room.
Why 2 per cent, and not the 1.75 the commission asked for
The Federal Occupational Pensions Commission recommended 1.75 per cent when it met on 4 September. Its own formula, applied at the end of September, pointed to 2 per cent, and that is the figure the cabinet picked. Social partners, consulted alongside the commission, did not agree with each other. Their proposals ran from leaving the rate at 1.25 per cent to lifting it to 3.
The statute tells the cabinet to look first at Confederation bond yields, and then at shares, bonds and property. Ten-year federal bonds yielded 0.33 per cent at the end of 2025 and 0.59 per cent at the end of September 2026. The Swiss Performance Index rose 17.8 per cent in 2025 and a further 7.6 per cent to the end of September 2026. The Swiss Bond Index of domestic AAA to BBB paper fell 0.2 per cent in 2025 and 1.1 per cent in the first nine months of 2026. Property was positive throughout. Taken together, the office said, the last two years were positive.
The same office estimates that pension funds earned 6.1 per cent in 2025 and 5.4 per cent to the end of August 2026. Coverage at funds without a state guarantee was about 122.5 per cent at the end of August, which is more than the fluctuation reserves they are meant to hold. The cabinet’s case for a clear rise is that this surplus can do something the low rate since 2024 has not: compensate savers for the inflation they have lived with since 2022. October’s inflation, at 1.5 per cent, was the highest in almost three years. A 1.25 per cent floor does not match that.
Employers call it the biggest jump the BVG has ever made
The Swiss Employers’ Association called the decision reckless on the day it was published. Barbara Zimmermann-Gerster, writing for the association, said a 0.75 point rise is the largest since the occupational-pension law was introduced, that the cabinet had brushed aside geopolitical risk, and that funds already squeezed by a high mandatory conversion rate will have less room to manoeuvre. The association wanted the rate left alone, or raised in smaller steps. It also noted that the legal floor has to be payable by the weakest funds, not only by those that earned 4.6 per cent last year.
That objection is about the structure of the second pillar, not about whether markets were kind in 2025. A fund with a young membership and a large surplus can pay 2 per cent without strain. A fund with many people close to retirement, and a conversion rate it already finds too high, credits that interest out of the same pot that has to finance pensions later. The cabinet looked at the average. The employers’ association is pointing at the funds that are not the average.
Who actually receives the higher credit
The new rate applies to the mandatory portion, from 2027, and it is not backdated. Someone who leaves a job during 2026 still takes the current 1.25 per cent minimum for the months up to the exit. Most funds set the real annual credit only at the end of the year, or at the start of the next one, and only for people still insured on 31 December. A higher floor does not, by itself, raise a pension already in payment. It raises the rate at which today’s workers’ mandatory savings must compound.
Two neighbouring arguments are easy to mix up, and they should not be. Committees in both chambers want a tax break for people who keep working after retirement. That is a tax idea, still short of a bill. The 13th AHV payment in December is a first-pillar benefit already promised. Thursday’s decision is neither. It is a legal minimum on second-pillar savings, higher than the experts asked for, lower than the union side of the consultation, and in force for the mandatory pot from New Year 2027.