The most important things first
From January 1, 2027, the BVG minimum interest rate rises from 1.25 to 2 percent. This applies only to the mandatory part of the retirement assets, not to the non-mandatory part. For the future pension, therefore, not only the rate is decisive, but above all the choice of pension fund.
From my experience, few insured people read exactly at what rate their fund credits the capital. Yet this figure is on the retirement statement, and it often says more about the later pension than salary alone. At Baeriswyl Beratungen we therefore always model such changes with model funds.
What did the Federal Council decide about the BVG minimum rate?
The Federal Council decided on November 4, 2026 to raise the minimum rate to 2 percent from January 1, 2027. Previously it had been 1.25 percent since 2024. The BVG Commission had recommended a 1.75 percent increase for 2027, so the Federal Council went beyond that.
| Time period | Minimum interest rate |
|---|---|
| 2017 to 2023 | 1.00 % |
| 2024 to 2026 | 1.25 % |
| from 2027 | 2.00 % |
The rise is the biggest since BVG introduction. The Federal Council justified the decision with the good financial position of pension funds and inflation since 2022. Employers’ associations and insurers criticized it, unions welcomed it.
To which part of the retirement assets does the higher rate apply?
The minimum interest rate applies only to the mandatory portion. This is the part of the retirement assets on the insured salary up to CHF 90,720 after deducting the coordination deduction of CHF 26,460, with statutory savings rates of 7, 10, 15 and 18 percent depending on age. Everything above is non-mandatory, and the fund itself sets the rate for it.
Who wants to know how much their own fund pays can find the answer on the retirement statement under “Interest” or in the fund’s annual report. It is exactly there that you see whether a fund treats the non-mandatory part equally, credits it at a lower rate, or credits more in good years.
The rate is the small dial. The fund is the big one. If you only look at the minimum rate, you miss the lever that moves ten times more.
What does the minimum rate from 2027 mean in francs?
At Baeriswyl Beratungen we model such questions with three model funds. For an example with 45 years, a salary of CHF 80,000, entry at 25 and retirement at 65, a fund that pays exactly the minimum rate shows a noticeable difference. The calculation accounts for contributions and compound interest until 65 as well as a conversion rate of 6.8 percent.
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This is noticeable, but it remains a model calculation. It assumes the rate stays at 2 percent until 65 and that the fund only pays the minimum. In practice, not only the legal rate is relevant, but also what the fund actually does with the capital.
Why is the choice of pension fund more important than the rate?
Contrary to the assumption that the minimum rate counts most, modeling shows something else: the fund itself moves significantly more. With the same employee on the same career path, different funds lead to very different end results.
| Model fund | Savings rates | Capital at 65 | Retirement pension per month |
|---|---|---|---|
| BVG minimum, 2% interest | 7 / 10 / 15 / 18 % | about CHF 329,000 | about CHF 1,860 |
| Average fund | 11 / 13 / 18 / 21 % | about CHF 414,000 | about CHF 1,860 |
| Very good fund | 23 % consistently | about CHF 606,000 | about CHF 2,830 |
Between the minimum fund and a very good fund there is about CHF 280,000 capital and almost CHF 1,000 more pension per month. The interest decision moves about CHF 30,000, the fund about CHF 280,000. With a salary of CHF 100,000, it totals over CHF 400,000, and with CHF 120,000 it totals over CHF 600,000.
The average fund shows something else: more capital, but because of the lower conversion rate of 5.4 percent, almost the same pension as the minimum. Therefore, for every fund question the question of pension versus capital also belongs.
What does this mean for employers?
The minimum rate is a duty of the fund, not of the employer. The choice of fund is, however, the employer’s business, and it decides for each employee hundreds of thousands of francs. If you have the fund solution reviewed, you can place the answers independently and without product sales.
- How high is the funding ratio? Funds with tight coverage can temporarily lower the rate below the minimum in case of underfunding.
- What was credited last on the non-mandatory part? There you can see whether the fund passes on the yields.
- What administration costs do the insured bear, and how high are the risk contributions?
What should you look out for now?
- Read the line “Interest” on the retirement statement, for both the mandatory and non-mandatory parts.
- Check whether the fund is underfunded; this is shown in the annual report or on request.
- Know your fund’s conversion rate; 6.8 percent applies only to the mandatory portion.
- Do not forget vested benefits accounts; the minimum rate does not apply there and the interest is often lower.
- When changing jobs, include the new employer’s fund in the decision.
Frequently asked questions
Does the higher BVG minimum rate also apply to my entire pension fund balance?
Can a fund pay less than 2 percent interest?
Does the conversion rate change with the higher minimum rate?
What should I particularly consider with a vested benefits account?
Two percent minimum rate is good news for anyone whose fund previously paid only the minimum. But for the retirement pension, much more matters: in which fund you are insured and how you draw later. At Baeriswyl Beratungen you can calculate your situation with the three model funds in two minutes and place the BVG minimum rate 2027 in the right context.
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