The Federal Commission for occupational benefits (BVG/LPP Commission) has recommended that the Federal Council increase the minimum interest rate from the current rate of 1.50% to 1.75% effective 1 January 2014.
This is the minimum interest crediting rate applicable to 2nd pillar (mandatory BVG/LPP benefits) pension assets. The 2nd pillar does not provide for a minimum interest rate for extra-mandatory pension assets. The interest crediting rate for extra-mandatory benefits is set in each case by the board of trustees of the relevant foundation.
Liberty BVG/LPP Collective Foundation has taken due note of the recommendation but does not believe that the slight improvement on the financial markets justifies a durable increase in the minimum interest rate. The increase puts even more pressure on Liberty BVG/LPP Collective Foundation and its competitors to realise sufficient returns with the authorised investments to cover the minimum interest rate and administration costs while satisfying other legal requirements.
In the current market environment and at a time when many financial institutions are lowering the interest rates on their pension schemes at regular intervals, the investment strategy chosen and implemented by institutional investors is more important than ever. Following its motto “free choice is the best choice”, Liberty BVG/LPP Collective Foundation takes the view that the rules introduced by the authorities are not necessary. On the contrary, a free and transparent market – without outside intervention – should be encouraged to allow treasurers to prove their abilities.
In 2014, Liberty BVG/LPP Collective Foundation will continue to meet the challenging market conditions and will use its best efforts to continue realising a respectable performance for its pension holders.