BVG minimum interest rate rises to 2 percent – who benefits
On CHF 100,000 of mandatory savings, the rate step works out at CHF 750 more a year. For the rest of the capital, the pension fund decides.
From January 2027, pension funds must pay interest of at least 2 percent on mandatory retirement savings. The Federal Council raised the rate on 4 November from 1.25 percent. It thus goes beyond the recommendation of the BVG commission, which had proposed 1.75 percent.
For insured persons, the decision can bring several hundred francs in additional interest per year. How much arrives in their account depends, however, on the mandatory savings and on the interest rate paid by their fund. Anyone already receiving more than 2 percent does not automatically get a further increase because of the Federal Council's decision.
CHF 750 more on CHF 100,000
On mandatory retirement savings of CHF 100,000, 1.25 percent produces annual interest of CHF 1,250. At 2 percent it is CHF 2,000: a difference of CHF 750. On CHF 200,000 the difference doubles to CHF 1,500.
The model calculation assumes that the savings are remunerated unchanged over a full year. New savings contributions and additions or withdrawals during the year are not taken into account. The rate step is 0.75 percentage points. Interest income in the example thus rises by 60 percent, but the accumulated capital does not.
The additional money is credited to the retirement savings. It is not an annual payout of CHF 750 into the salary account. Over the years, the credited interest can itself earn further interest. How large this effect is by retirement cannot be calculated from the 2027 rate alone.
The statutory minimum is only part of it
Many pension funds insure more than the statutory benefits. For this non-mandatory capital, each fund sets the interest rate itself. The new floor of 2 percent therefore cannot simply be applied to the total amount on every pension statement.
The pension institution CIEPP explains in its information for insured persons that a fund may also pay interest above the statutory minimum rate. For the non-mandatory part, it sets the rate according to its financial development. The actual rate can therefore be higher than the figure prescribed by the Federal Council.
On the pension statement, it is therefore worth comparing total retirement savings with the BVG share shown. The Pensionskasse Stadt Zürich describes this share as a comparative calculation to demonstrate the statutory minimum benefits. It is already included in the total savings and must not be added again.
Good reserves, differing interests
The Federal Council justifies the increase with the sound financial position of the pension institutions. According to estimates by the Federal Social Insurance Office, they achieved an average return of 6.1 percent in 2025 and 5.4 percent in 2026 up to the end of August. The estimated average funding ratio of institutions without a state guarantee stood at 122.5 percent at the end of August.
On average, the assets available thus exceed the funds needed to cover obligations. But the average does not say how much room for manoeuvre a particular fund has. With the higher interest rate, the Federal Council also wants to create compensation for the inflation accumulated since 2022.
The Swiss Trade Union Federation and Travail.Suisse welcome the decision, as SRF reports. The Swiss Insurance Association, by contrast, considers 1 percent appropriate. It argues that the minimum rate must be promised in advance, while investment results are only known afterwards. In addition, funds needed returns for provisions, reserves and ongoing pension obligations. The industry association represents private insurers, including providers of full insurance solutions.
The pension projection remains an estimate
The minimum rate applies interest to capital during the savings phase. The conversion rate has a different task: at retirement it determines what annual pension arises from the existing capital. The new rate therefore does not mean a pension increase of 0.75 percentage points, nor an automatic adjustment of pensions already being paid.
The projected pension on the pension statement is also not a binding commitment. It is based on assumptions about future contributions and interest; the PKZH expressly points out that no entitlement to benefits arises from it. Anyone wanting to understand the effect of the decision on their own savings needs two figures from their fund for 2027: the mandatory BVG share and the interest rate actually credited.
Sources
- Federal Council and BSV: minimum interest rate from 2027, 4 November 2026
- CIEPP: interest rate and conversion rate in the second pillar
- Pensionskasse Stadt Zürich: pension statement and BVG share
- Swiss Insurance Association: statement of 4 November 2026
- SRF: decision and reactions to the higher minimum rate
- Title image: Yogabrata Chakraborty / Billjones94, Swiss one-franc coins
- Licence of the title image: CC BY-SA 4.0
- Article image: Zinneke, partial view of the Federal Palace in Bern
- Licence of the article image: CC BY-SA 3.0
