Cabinet lowers interest on pension capital

Money paid into the occupational pension fund will for the first time yield less than two per cent in interest on capital from next January.

This content was published on November 2, 2011 - 12:54 and agencies

The cabinet on Wednesday decided to lower the interest rate to 1.5 per cent from two per cent in line with recommendations by a government advisory board.

The move was prompted by volatile financial markets as well as falling stocks and bonds, a cabinet statement said.

Trade unions had called for a rate of up to 2.25 per cent, while the private insurance sector had come out for a reduction to just one per cent.

In March 2010, a coalition of trade unions, consumer groups and centre-left parties successfully blocked parliament plans to lower the minimum conversion rate of the occupational pension scheme.

The system was introduced on a mandatory basis for employees in 1985. It is an element of Switzerland’s three-tier pension scheme.

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