The minimum BVG/LPP interest rate will not change in 2011
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On 1 October, the Federal Council decided to leave the minimum BVG/LPP interest rate at 2% in 2011. The long-term average yield of certain securities was decisive in determining the minimum interest rate.
The Federal Council has decided not to change the minimum interest rate for BVG/LPP retirement savings capital which will remain at 2% in 2011. The Federal Commission for occupational benefits based its calculations on a combination of minimum-risk and higher-risk investments. Like last year, it took the smoother long-term yield of 7-year federal bonds as the starting point for those calculations. That yield corresponds to the return that could be achieved with a near risk-free bond portfolio. In addition, it took the Pictet BVG Index 93 and IPD Wüest und Partner Index which combine equities, bonds and real estate.
As of the end of July 2010, this calculation formula gives a value of 2.18% compared with 2.08% as of the end of August. Stock markets still have not made up for the losses incurred in the aftermath of the financial crisis. Interest rates remain at an all-time low. According to the Federal Social Insurance Office, this formula will also be used for setting the minimum interest rate in coming years.
BVG/LPP minimum interest rate compared with inflation and risk-free investments
Source: www.FinanzMonitor.com, Status: 2009
Since the Federal Law on Occupational Retirement, Survivors' and Disability Pension Plans came into force in 1985, the minimum interest rate has been progressively reduced from 4% to 2% today. The last adjustment was made in 2009 when the rate was lowered from 2.75% to 2%.
The Law does not impose a minimum interest rate for supplemental retirement savings capital in excess of the BVG/LPP compulsory benefits.
