The Swiss Federal Council has decided to increase the minimum interest rate for occupational pension provision from 1.25% to 2% with effect from 1 January 2027. This significant increase has been made possible in part by the sound financial position of pension funds and favourable financial market developments in recent years.
The minimum BVG interest rate determines the minimum return credited to retirement savings under the mandatory component of the second pillar of the Swiss pension system. Set at 1.25% for 2026, it will rise to 2% in 2027.
The Federal Council's decision goes beyond the recommendation of the Federal Commission for Occupational Pensions, which had proposed a rate of 1.75%.
For pension scheme members, this increase means that their mandatory retirement savings will benefit from a higher minimum interest rate in 2027, helping to gradually strengthen their pension capital.
This decision comes against a particularly favourable backdrop for Swiss pension funds.
According to estimates from the Federal Social Insurance Office (FSIO), pension funds achieved an average investment return of 6.1% in 2025 and 5.4% between January and the end of August 2026. Their financial position has also strengthened: at the end of August 2026, the average funding ratio of pension funds without a state guarantee was estimated at 122.5%.
Several asset classes have contributed to this performance. Equity markets, in particular, have delivered strong returns, while real estate has continued to perform positively. Meanwhile, the yield on ten-year Swiss Confederation bonds rose from 0.33% at the end of 2025 to 0.59% at the end of September 2026.
As a result, pension funds now hold, on average, sufficient reserves to meet their obligations. According to the Federal Council, this provides justification for a significant increase in the minimum interest rate.
The increase in the minimum interest rate is a positive development for pension scheme members, but it is only one of several factors contributing to the accumulation of retirement savings.
It is also important to remember that this rate applies only to pension assets covered by the mandatory BVG scheme. Depending on the structure and financial position of the pension fund, the actual interest credited to total pension savings may differ.
Occupational pension provision should also be considered within a broader framework, alongside the Swiss Old Age and Survivors' Insurance (OASI), private pension arrangements and personal assets. Understanding how these different components work together makes it possible to anticipate future retirement income more accurately and, where necessary, put complementary solutions in place at an early stage.
At Piguet Galland, our financial planning specialists support clients in this process, helping them integrate pension provision into a comprehensive, long-term approach to wealth management.
Read the Swiss Federal Council's official press release (french only)