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Conversion rate

Umwandlungssatz

Conversion rate

 

Amendment to conversion rate as of 1 January 2023

Low interest rates mean that expected future returns on investments will be lower. Funds are being redistributed from people in work to retirees. Pensioners enjoy guaranteed pensions and returns, while the risks are borne by active insured members. In order to improve intergenerational equity, the conversion rate will be reduced gradually as of 1 January 2023. Various mitigating measures will help to make the changes socially acceptable.

 

Info
 
This page provides you with timely and transparent information on the changes that will be made as of 1 January 2023.
 

 

The changes and background information in brief:

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Full pension regulations as of 1 January 2023

 

 

 

 

 

 

 

faq
FAQs

Find the answers to frequently asked questions here.

Online Sessions
Online Q&A session

Take part in an online Q&A session via Microsoft Teams. The board of trustees, the Management Board and comPlan’s pension advisors will be on hand to answer your questions.

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Contact at comPlan

If you have any other questions on the changes being made as of 1 January 2023, then simply give comPlan a call or get in touch by e-mail.

 

The changes in detail

How are the conversion rates set to change?

As of 1 January 2023, the conversion rate for ordinary retirement at age 65 will be reduced from the current level of 5.34% to 5.0%. The rate will be reduced on a step-by-step basis, namely in 17 monthly steps of 0.02%, meaning that the process will be ongoing until 1 May 2024. At the same time, the conversion rates for retirement prior to an individual’s 65th birthday will be reduced. The FAQ at the bottom of this page explains the most important technical terms, as well as providing other information.

 

Note 1

You can consult the conversion rates that will apply to you at comPlan Online (comparative statement, pension statement and retirement simulation). Please note that your retirement pension amount depends not only on the conversion rate, but also on the amount of your retirement savings and the mitigating measures. As a result, instead of looking at the conversion rates, you should take a particular look at the effective retirement benefits (retirement pension/retirement capital) in CHF.

 

What do the lower conversion rates mean for me if I retire on 1 January 2023 or later?

The conversion rate is being reduced gradually and various measures are being taken to mitigate the impact. This means that your retirement pension will continue to increase after 1 January 2023 for every month that you remain in work, or for every month by which you delay your retirement. During the conversion rate reduction phase, this monthly increase will be lower than it was before. However, it is not possible that you will receive a lower retirement pension from comPlan after 1 January 2023 than if you had retired earlier.

 

I plan to withdraw my entire retirement savings as a lump sum. Do the new conversion rates affect me at all?

If you opt for a lump sum, your existing retirement savings will be paid out to you and the conversion rate will not be applied directly. The low interest rates and the lower expected return on investments, i.e. the factors behind the reduction in the conversion rate, will also, however, affect your private investment of the lump sum.

 

Which mitigating measures are planned?

If your retirement pension is to remain more or less the same despite lower conversion rates, a bigger retirement savings balance will be required at the time of retirement. This is why the savings contributions are being increased. At the same time, comPlan guarantees you that, upon your ordinary retirement at the age of 65, your retirement pension based on the Standard savings option will be no more than 2% lower than it was before the reduction in the conversion rates. If the higher savings contributions are not sufficient to limit the reduction in your pension based on the Standard savings option to 2%, comPlan will credit extra contributions to your account.

 

How are Swisscom’s savings contributions set to change?

Swisscom’s savings contribution for all insured persons aged 22 or over will be increased by 0.7 percentage points. At the same time, the risk contribution (for death and disability benefits), which is paid by Swisscom in full, can be reduced by 0.7 percentage points. This means that the changes will have no impact on Swisscom’s costs.

 

How will my own savings contributions change?

In the Standard savings option, the savings contributions for all insured persons aged 22 or over will be increased by 0.5 percentage points. In the Plus savings option, the savings contributions for the age group "22 to 39" will be increased by 0.2 percentage points. For all other employees/in the other savings options, the savings contributions will remain unchanged. This means that the following savings contribution rates will apply as of 1 January 2023:

Note 2

You can consult your comparative statement at comPlan Online to see how your personal contributions are set to change as of 1 January 2023.

 

Why are the employee savings contributions not being adjusted in the Extra savings option?

There are statutory provisions limiting a pension fund’s maximum savings contributions. comPlan has already exhausted the potential available to it in the Extra savings option and cannot increase the savings contributions any further.

 

What are extra contributions?

The extra contributions will be credited to your retirement account from 1 January 2023 until 31 May 2024 over and above the savings contributions and interest. As they have a direct impact on the amount of your retirement pension, they help to cushion the effects of the lower conversion rates. The extra contributions are borne by comPlan.

 

How much will I receive in extra contributions?

The amount of your extra contributions will be calculated by the pension fund expert as of 1 January 2023. The amount will be defined such that your retirement pension at age 65 based on the Standard savings option will be reduced by no more than 2%. This means that the impact of the reduction in the conversion rate on your voluntary savings contributions under the Plus and Extra savings options will not be offset. The reduction in the conversion rate will also not be offset on voluntary payments and payments made by Swisscom since 1 January 2021. If you join Swisscom on or after 1 January 2022, you will receive extra contributions for the future savings you accumulate with comPlan, but not for the savings you accumulated with your previous pension scheme that you have moved to comPlan.

 

Note 3

You can consult the provisional amount of your monthly extra contributions in the comparative statement for 2022/2023 and your pension statement at comPlan Online.

 

Will there be any change in the amount of the retirement-linked child’s pension?

No. At comPlan, the amount of the retirement-linked child’s pension is based on the compulsory portion (statutory minimum) of your retirement savings, meaning that it is not affected by the changes.

 

Will the AHV bridging pension financed by Swisscom be continued?

Yes, the entitlement to the bridging pension will continue to apply unchanged.

 

What changes are being made to the AHV bridging pension that I finance myself?

If the bridging pension financed by Swisscom is lower than the maximum AHV retirement pension, you can increase it to the maximum amount on a voluntary basis. The increase in the bridging pension will be financed by reducing your retirement capital or your life-long retirement pension. The reduction rates will be updated with effect from 1 January 2023 and apply to people retiring on or after this date.

 

 

I have already retired. Will my current pension continue to be paid out unchanged?

Yes, your current pension is guaranteed and will remain unchanged. If you retire before or on 1 December 2022, you will also not be affected by the changes in the conversion rates as of 1 January 2023.

 

I have already taken partial retirement. Will my current pension continue to be paid out unchanged?

Yes, your current partial retirement pension is guaranteed and will remain unchanged. If you take full retirement after 1 December 2022, your future entitlement to the remaining retirement benefits will be subject to the same provisions that apply to other active insured members: the adjusted conversion rates, the adjusted savings contributions and the entitlement to extra contributions.

 

Background information

Why does the conversion rate need to be adjusted?

The sustained period of low interest rates means that the return on investments will be lower in the future. Funds are being redistributed from active insured members to retirees. The idea, however, is to reduce this redistribution in light of the fact that the active insured members bear the risks in the pension fund, while retirees enjoy a guaranteed return. This is why the return guarantee contained in the conversion rate and, as a result, the conversion rate itself is being reduced. This will allow comPlan to improve intergenerational equity.

 

How specifically are the return opportunities distributed between younger and older insured persons?

If a person retires today, the guaranteed life-long retirement pension features a fixed interest rate of approx. 2.7% a year (via the conversion rate). By contrast, the average interest rate on the retirement savings of active insured members has been half this amount over the last 5 years (1.35% a year). The reduction in the conversion rates reduces the interest rate included in new retirement pensions to approx. 2%. This will give younger people, in particular, the chance to generate a higher return on their pension fund savings, too.

 

Why does comPlan expect the return on investment to be lower in the future?

Interest rates have fallen considerably over the last 20 years. The investment returns seen in recent years, some of which have been very attractive, are no indication of the return prospects going forward. The fact that interest rates are at an all-time low will have a negative impact on future investment returns. This will affect not only fixed-income investments, but also real estate and, to some extent, shares.

 

Are the measures linked to comPlan’s coverage ratio?

No. The changes being made effective as of 1 January 2023 are designed to reduce redistribution from younger to older insured persons and to improve intergenerational equity. comPlan’s coverage ratio is not a decisive factor.

 

Why are the conversion rates not being adjusted with retroactive effect?

Current pensions are guaranteed and reductions are prohibited by law.

 

Will people who have already retired nevertheless make some contribution to the measures to improve intergenerational equity?

Yes. In the event that someone already drawing a pension dies, the pension payable to his/her surviving spouse/partner will, with effect from 1 January 2023, correspond to 60% of the last retirement/disability pension drawn across the board (to date, the surviving spouse’s/partner’s pension amounted to 60% or 70% depending on the time at which the retirement/disability pension was first payable). In addition, the calculation of the retirement pension that recipients of comPlan disability pensions receive as of the time at which they turn 65 will be revised and made fairer. Both changes will help to ensure that the conversion rate does not have to be reduced to below 5.0%.

 

What financial contribution is Swisscom making to the measures?

The 0.7 percentage points that Swisscom will save on risk contributions will be returned to the insured persons in full via the 0.7 percentage point increase in the employer’s savings contributions. Swisscom will also continue to pay a conversion loss contribution corresponding to 1.2% of the total wage bill. Without this conversion loss contribution, the conversion rate would have to be reduced to well below 5.0%.

 

Helping you to plan

How can I find out what the changes mean for me personally?

We have put together an overview of your personal contributions and benefits before and after 1 January 2023. To access it, log into comPlan Online and click on “Comparative statement for 2022/2023”. This comparative statement is merely a snapshot. From now on, all comPlan calculations will take the changes that will apply from 1 January 2023 into account.

 

What do I have to do if I want to retire while the current conversion rates are still in force?

Terminate your contract of employment with effect from 30 November 2022 at the latest. Make sure you adhere to your contractual notice period.

 

Note 4

Thanks to the various mitigating measures, the retirement benefit (retirement pension or retirement capital) you receive as of 1 January 2023 will not be any lower than if you had retired earlier. So before you terminate your contract, you should check whether early retirement makes sense for you. You can compare the amount of retirement benefits you will receive on various retirement dates at comPlan Online (comparative statement for 2022/2023, pension statement and retirement simulation).

 

I want to improve my comPlan retirement benefits. What options do I have?

You can increase your savings option to Plus or Extra with effect from 1 January. Alternatively, you have the option of increasing your retirement benefits by making voluntary buy-ins. You can find more information on buy-ins here.

 

Note 5

The maximum potential buy-in amount depends on various factors and is always merely a snapshot. As of 1 January 2023, the buy-in tables for all savings options will be adjusted. This may increase your potential buy-in amount.

How can I change my savings option?

You can change your savings option between 1 May and 31 December for the following calendar year at comPlan Online. This means that you can currently change the savings option with effect from 1 January 2022. Changes effective 1 January 2023 can be made as of 1 May 2022.

 

Questions

Do you still have questions after reading the information and watching the explanatory video on the reduction in the conversion rate?

 

What to do next:

 
faq
FAQs

Find the answers to frequently asked questions here.

Online Sessions
Online Q&A session

Take part in an online Q&A session via Microsoft Teams. The board of trustees, the Management Board and comPlan’s pension advisors will be on hand to answer your questions.

kontakt
Contact at comPlan

If you have any other questions on the changes being made as of 1 January 2023, then simply give comPlan a call or get in touch by e-mail.