Basler Insurance, with its Bâloise collective foundations, still fully supports the comprehensive insurance model for occupational pensions because it is an appropriate solution for a large part of the Swiss economy; the Swiss Insurance Association estimates that around one in three employers have a comprehensive insurance solution. However, Baloise needs to adjust the configuration of occupational pension provision in view of the more challenging business and regulatory environment and the persistently low level of interest rates. Policymakers have spent years trying to find a solution to bring long-term stability to pension provision that will enjoy majority support. At the end of November 2020, the Swiss Federal Council published its dispatch on the reform of occupational pensions. The main change is the lowering of the conversion rate to 6 per cent. This and other measures should protect pensions, strengthen the funding base and improve the pension cover of part-time employees. The parliament will discuss the dispatch this year, and the hope is that a workable solution will be found quickly. Action is required, whatever the outcome.
The conversion rate for the annuitisation of compulsory retirement assets, which is set by politicians, was last adjusted in 2005. However, it no longer reflects the increased life expectancy. This means that the redistribution of assets from people in work to those drawing their pension will continue to increase. This process is often criticised and does not contribute to social equality. To counteract this redistribution and make the system fairer for policyholders who are still working, Baloise will progressively lower the conversion rates between now and 2023. It will continue to use the ‘splitting model’, whereby retirement pensions are calculated in a transparent manner separately for retirement assets from compulsory savings components and for retirement assets from savings components above the income threshold (Überobligatorium). The statutory minimum is guaranteed in any case. If, in a specific case, this cannot be achieved with the new conversion rates, Baloise will top up the affected retirement pensions and provide the guaranteed minimum benefits.
The new conversion rates will be as follows:
|From compulsory savings components||From savings components above the income threshold||From compulsory savings components||From savings components above the income threshold||From compulsory savings components||
From savings components above the income threshold
|Men, aged 65||6.80%||4.90%||6.56%||4.76%||6.29%||4.56%|
|Woman, aged 64||6.80%||4.80%||6.47%||4.69%||6.20%||4.49%|