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Swiss voters will decide on the reform of occupational pensions (OPA) later this year. If the reform is accepted, significant changes will occur:

• • The minimum conversion rate would be reduced to 6%.
• • An interim generation will receive pension supplements.
• • Part-time workers will be better protected.
• • Younger workers will have to contribute a higher percentage to their pension funds, while older workers will contribute less.

Learn more about the measures and impacts of the reform.

Reduction of the Conversion Rate

The amount of pension received after retirement depends significantly on the conversion rate. This rate determines how personal retirement savings are converted into a lifelong pension. Under the OPA reform, the statutory minimum conversion rate in the mandatory part would decrease from 6.8% to 6%. This means that with a retirement savings of CHF 100,000, the annual pension would decrease from CHF 6,800 to CHF 6,000.

Retirees already receiving pensions will not be affected by this reduction; ongoing pensions will not be cut. The minimum conversion rate applies only to the mandatory part, which currently covers incomes between CHF 22,050 and CHF 88,200. Many workers also have coverage beyond the mandatory minimum, where the conversion rate is usually lower. The reduction primarily affects those with predominantly mandatory retirement savings.

smzh tip: Regardless of the reform, it is evident that many retirment funds will continue to lower their conversion rates in the over-mandatory part, leading to lower pensions. Strengthen your retirement savings by making voluntary contributions to your retirement fund and ensure you do not miss contributions to pillar 3a.

Pension Supplements for the Interim Generation Pension supplements will be introduced for a specific generation nearing retirement. This measure aims to mitigate the effects of the lower minimum conversion rate and applies to the first 15 cohorts following the implementation of the new regulations. Approximately half of this group will receive lifelong pension supplements.

The amount of these supplements varies depending on the cohort and the individually accumulated retirement savings. The first five cohorts will receive up to CHF 200 additional per month, the next five up to CHF 150, and the last five up to CHF 100. Individuals with retirement savings below CHF 220,500 will receive the full supplement. For savings between CHF 220,500 and CHF 441,000, the supplement decreases gradually, and it is completely discontinued for higher amounts.

To be eligible for these pension supplements, certain conditions must be met:

• • Be insured in a pension institution at the start of retirement benefits.
• • Have reached the minimum age for early AHV retirement benefits.
• • Have been insured in a pension institution for at least 15 years.
• • Have been continuously insured in the AHV for at least ten years before the start of retirement benefits.
• • Receive at least 50% of retirement benefits as a pension (rather than a lump sum).

Reduction of Entry Threshold ①

Currently, only individuals earning more than CHF 22,050 annually are mandatory members of the occupational pension system. The reform proposes to lower this entry threshold, thereby including more part-time workers and individuals with lower incomes in the occupational pension system.

Coordination deduction ②

The OPA currently applies: annual salary minus coordination deduction of CHF 25,725 equals the insured salary. This deduction is intended to coordinate the benefits of the first and second pillars and prevent overinsurance.

However, part-time workers and people with several jobs often have poor or no occupational pension cover as a result. The OPA reform is intended to correct this by abolishing the fixed coordination deduction and now insuring 80 percent of the salary. The amount of the coordination deduction would therefore depend on the salary and indirectly also on the degree of part-time work.

smzh tip: Check the pension plan of your employer's pension fund. Progressive employers adjust the coordination deduction in proportion to the degree of employment. You can also make private provisions by paying into pillar 3a every year, even if it is not the maximum amount. These contributions can be deducted from your taxable income.

Amendment of OPA retirement credits

Another measure of the OPA reform concerns savings contributions, also known as retirement credits. These are calculated as a percentage of the insured salary and determine how much of the salary is credited to the insured person's retirement assets. These contributions increase over the course of the insured person's working career. There are currently four levels, which vary between 7 and 18 percent (see table below). After the reform, there will only be two levels: Savings contributions of 9 percent will apply to those in employment between the ages of 25 and 44, and 14 percent from 45 to 65. These less graduated savings contributions are intended to make older employees more attractive to employers.

Whether the personal savings contributions increase or decrease in Swiss francs depends on individual factors, as both the retirement credits and the insured salary can change.

How the OPA reform affects you can vary greatly from person to person. Our experts are happy to provide you with advice.

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