This market alert covers two developments:
- The rejection of the Pension Reform 2020 in the referendum held on 24 September 2017
- The ability to set up new pure DC retirement plans to cover salary components above 150% of the BVG limit (the salary level under which the mandatory second pillar plan is applicable) from 1 October 2017
Public Rejection of the Pensions Reform 2020
The Pensions Reform 2020 was designed to make the existing arrangements more sustainable through a number of reforms, which included reducing benefits, increasing contributions and the female retirement age, and also linking the first and second pillar benefits (state benefits and mandatory occupational benefits). Under Swiss Law it was necessary to confirm these major changes by public referendum, and the proposals were rejected by the public in the nationwide vote on 24 September 2017.
Reform is still necessary, but is now likely to be directed at each pillar separately. Company plans may need to reassess the contribution rates required to their current plans in the meantime.
New pure DC retirement plans for highly paid employees
From 1 October 2017, it will be possible to introduce pure DC retirement plans in respect of salary components in excess of 150% of the BVG limit (currently this means salary components in excess of CHF126,900 p.a.). Employees in these plans will need to be able to determine the investment strategy to be applied to their accounts, and there will be a number of other conditions. Please download our newsletter for further information.