Swiss Federal Council raises minimum pension interest rate to 2% from 2027

A rise above expert advice

The Federal Council decided on Wednesday, 4 November, to raise the minimum interest rate on mandatory occupational pension savings from 1.25% to 2.0%, effective January 2027. The rate sets the least interest that must be credited to the compulsory part of pension savings, and the government sets it. At present, 100,000 francs in that portion earns at least 1,250 francs a year, a sum that could rise to 2,000 francs. The decision goes further than the 1.75% that the federal LPP commission had recommended, while social partners had proposed anything between 1.25% and 3%.

Rate since 20241.25%

Federal LPP commission recommendation1.75%

Federal Council decision from January 20272%

Rate since 2024

1.25 %

Federal LPP commission recommendation

1.75 %

Federal Council decision from January 2027

2 %

Data from the article text

Strong fund performance

The government based the increase on gains in financial markets and on the sound position of pension institutions. The Swiss Performance Index rose 17.8% in 2025 and another 7.6% through the end of September 2026, and real estate also gained ground. Estimates from the Federal Office of Social Insurance put average pension fund returns at 6.1% in 2025 and 5.4% through the end of August 2026. Institutions without a state guarantee held an average coverage ratio of 122.5% at the end of August 2026, meaning they hold reserves above what they need to meet their obligations.

2025 average6.1%

2026 through end of August5.4%

2025 average

6.1 %

2026 through end of August

5.4 %

Data from the article text

What the increase is meant to do

The minimum rate is tied to the yield on federal bonds, shares, bonds and real estate, and the government says the picture was positive in both 2025 and 2026. Federal bond yields rose in 2026, according to Blick. The increase is meant to offset inflation that has been comparatively high since 2022, which has eroded the purchasing power of retirement savings. Blick reports that the proposal came from Interior Minister Elisabeth Baume-Schneider, a Social Democrat, and that the government followed it.

Scale of the change for insured people

Blick describes the rise as the largest single increase since the BVG came into force in 1985. The minimum rate was last at 2.0% in 2011 and has stood at 1.25% since 2024, according to Keystone-SDA and Blick. Insured people will receive the higher interest on the mandatory part of their savings from January 2027. Pension funds may pay more than the minimum on a voluntary basis when their finances allow it, so the 2.0% works as a floor for the compulsory portion rather than a ceiling.