On 4 November 2026, the Federal Council decided to raise the minimum interest rate for the 2nd pillar occupational pension (BVG/LPP) from 1.25% to 2% for 2027. It thus goes beyond the 1.75% recommended by the Federal Commission for Occupational Pensions (BVG Commission). It cites the very sound financial health of pension funds and the inflation observed since 2022.
According to the Federal Council press release, the 2% rate corresponds to the result of the BVG Commission's formula at the end of September 2026. The commission, for its part, had settled on its recommendation earlier, in a press release published on 31 August 2026.
What the 2nd pillar minimum rate changes on a savings balance
The minimum rate sets the floor interest that pension funds must pay on retirement savings under the mandatory scheme. It does not apply to all accumulated savings: only the mandatory portion, defined by the Federal Act on Occupational Old-Age, Survivors' and Invalidity Pension Provision (BVG), is affected.
An example shows the gap (editorial calculation, excluding contributions paid during the year). On mandatory savings of 100,000 francs, the minimum interest rises from 1,250 francs at a rate of 1.25% to 2,000 francs at a rate of 2%. The difference amounts to 750 francs over one year.
The rate remains a minimum. The BVG Commission points out that the supreme body of each pension institution, made up of equal numbers of employer and employee representatives, may exceed it if its financial situation allows. What a fund pays above that therefore depends on its own decision.
Why the Federal Council goes beyond the recommendation
The law requires taking into account first the yield on Confederation bonds, then the returns on equities, bonds and real estate. The Federal Council considers that overall developments were positive in 2025 as well as in 2026.
It also relies on estimates from the Federal Social Insurance Office (FSIO). According to these, the average funding ratio of pension institutions without a state guarantee stood at 122.5% at the end of August 2026. On average, funds therefore hold fluctuation reserves above the minimum needed to meet their obligations.
For the government, this "very solid" situation allows a marked increase, which offsets the relatively high inflation recorded since 2022. The BVG Commission had also weighed other criteria, such as wage trends, inflation and geopolitical risks.
Key figures
- Ten-year Confederation bonds: 0.33% at the end of 2025, 0.59% at the end of September 2026.
- Swiss Performance Index (SPI), the broad index of Swiss equities: +17.8% in 2025, +7.6% in 2026 up to the end of September.
- Swiss Bond Domestic AAA-BBB bond index: -0.2% in 2025, -1.1% up to the end of September 2026.
- Average return of pension institutions estimated by the FSIO: 6.1% in 2025, 5.4% up to the end of August 2026.
- Average funding ratio of funds without a state guarantee: 122.5% at the end of August 2026.
The BVG minimum interest rate since 2024
The rate had remained unchanged for three years in a row, according to finews.ch and the 2nd pillar key figures page of Helvetia Consulta, a Basel-based occupational pension consultancy.
| Year | BVG minimum interest rate |
|---|---|
| 2024 | 1.25% |
| 2025 | 1.25% |
| 2026 | 1.25% (maintained on 1 January 2026) |
| 2027 | 2% (decision of 4 November 2026) |
Far-apart positions on the right level
The increase decided remains within the range advocated by the social partners consulted. According to the Federal Council, they had proposed rates ranging from 1.25% to 3%.
| Stakeholder | Rate proposed for 2027 |
|---|---|
| Swiss Insurance Association (SIA) | 1% |
| Social partners | from 1.25% to 3% |
| BVG Commission (10 votes to 4) | 1.75% |
| Federal Council (decision) | 2% |
The Swiss Insurance Association (SIA), the umbrella organisation of private insurers, considers the increase far too steep, finews.ch reported on 4 November 2026. "The statutory minimum guarantee must remain sustainable in the long term, including for pension institutions that offer extended guarantee promises," the association writes in its press release.
Its director, Urs Arbter, believes the BVG Commission had already recommended a "critical" and "politically motivated" increase. In his view, the Federal Council "significantly weakens occupational pension provision" from a long-term perspective. The SIA adds that a prudent minimum does not prevent a financially healthy fund from paying more.
The end of the year is a busy one for the mandatory 2nd pillar. On 1 January 2027, survivors' and invalidity pensions will also be adjusted to price developments, by 2.1%, 1% or 1.2% depending on their history, as announced by the FSIO on 22 October 2026.
What we don't know yet
- The rate each pension fund will pay in 2027 above the minimum: it depends on the decision of its supreme body.
- The quantified effect of the increase on institutions offering extended guarantees, which worries the SIA: its reaction gives no estimate.
Sources
- Federal Council: press release on raising the minimum interest rate to 2%, 4 November 2026
- Federal Commission for Occupational Pensions: recommendation of a 1.75% rate, 31 August 2026
- finews.ch: reaction of the Swiss Insurance Association, 4 November 2026
- Helvetia Consulta: 2nd pillar key figures
