BVG 21 reform

After a long debate, the reform of the occupational benefit regulation (BVG 21) was adopted in parliament on 17 March 2023. The reform is intended to ensure the continued existence of the second pillar while at the same time taking into account the needs and expectations of the different categories of plan members. It represents a compromise between social and political actors. The reform complements the AHV reform (AHV 21), which was approved by public vote on 25 September 2022.

The aim of this occupational benefits reform is to secure the pension level, strengthen the financing and improve the coverage of part-time workers - and thus especially women. The most important innovations of the reform are as follows :

• Reduction of the minimum conversion rate from 6.8 % to 6 % for mandatory benefits: The conversion rate determines the amount of the annual pension based on the accrued savings. It must be adjusted to increasing life expectancy and expected returns on capital.
• Lifelong pension supplement on occupational benefits for 15 cohorts of the transitional generation: full supplement for retirement assets of up to CHF 215,100 at the time of retirement, degressive supplement in case of retirement assets between CHF 215,100 and CHF 430,200 and no compensation in case of higher assets. Overall, about 50% of new pensioners of the transitional generation will be entitled to a full or reduced pension supplement.
• Lowering of the entry threshold for occupational benefit plans from CHF 22,050 to CHF 19,845: this will result in a better position for part-time and multiple employment employees.
• There is no longer a fixed coordination offset (previously CHF 25,725), but 80% of the insured salary is insured: this is intended to improve the position of lower-earning part-time workers.

The reform was and still is very controversial. Above all, the lowering of the conversion rate and the compensation measures are criticised. It is therefore becoming apparent that a referendum will be held, so that this reform will likely be put up for public vote in spring 2024. If the reform is rejected in a public vote, a new solution for demographic developments would have to be discussed.

Authors

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Angelica Meuli

Associate Director

email Email phone +41 21 321 68 10

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Estelle Caveng

MLaw, Legal Consultant

email Email phone +41 43 488 44 00

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