The BVG Reform: What You Need to Know About Changes in Occupational Pensions

What does this mean for your pension and retirement planning? At Caveo, we believe it's wise to take control of your pension planning rather than relying solely on political decisions. Read on to find out how this reform could impact you and how you can best prepare for it.

1. Reduction of the Conversion Rate: Lower Pensions with the Same Retirement Savings

One of the central aspects of the reform is the reduction of the conversion rate in the mandatory occupational pension plan from the current 6.8% to 6.0%. The conversion rate determines the annual pension paid out from the accumulated retirement savings. For example, with retirement savings of CHF 100,000, the annual pension is currently CHF 6,800. With the reform, this would decrease to CHF 6,000. This adjustment is necessary to account for increased life expectancy and lower returns on retirement savings.

To cushion the effects of this reduction, the Federal Council has proposed compensatory measures. Nevertheless, in some cases, this could still result in lower pensions. This highlights the importance of early and comprehensive retirement planning to avoid unforeseen financial challenges in retirement.

2. Increasing the Insured Salary: More Security for Low Incomes

The first compensatory measure involves increasing the insured salary in occupational pensions. Until now, a fixed coordination deduction of CHF 25,725 has been subtracted from the salary, regardless of the actual income or employment level. This regulation particularly disadvantages employees with low incomes. The reform now proposes that instead of a fixed amount, 20% of the gross salary will be deducted. As a result, 80% of the salary will be insured—especially beneficial for those with low incomes. For these individuals, this typically results in a significantly higher pension.

For employees and employers, this adjustment means higher salary contributions to the pension fund. While this strengthens retirement provisions, it also means you need to carefully assess how this increase affects your personal financial planning.

3. Pension Supplement for the Transition Generation: Smoothing the Shift

For the so-called transition generation, a pension supplement is planned. This aims to cushion the effects of the reform on those who will retire within 15 years after the reform comes into force and whose retirement savings will not have been sufficiently strengthened under the new regulations. The amount of the supplement depends on the year of birth and the accumulated retirement savings and can be up to CHF 200 per month. While this provides a certain level of security, it’s important to note that this support only applies to a limited group.

4. Improving Pensions for Part-Time Workers and Low Incomes

To improve pension provisions for those with low incomes, the entry threshold for occupational pensions will be lowered from CHF 22,050 to CHF 19,845. This change will include around 100,000 additional people in the occupational pension scheme. For these individuals—often part-time workers or employees with multiple smaller incomes—this means better retirement security. Careful planning is also essential here to ensure that these additional contributions are wisely invested.

5. Lower Savings Contributions for Older Employees: Encouraging Employment of Older People

Another reform aspect is adjusting the savings contributions for older employees. Until now, employers had to pay significantly higher contributions for older employees than for younger ones, which could disadvantage them in the job market. The reform proposes reducing the differences between contributions for younger and older employees. This makes older employees more attractive to companies but could also mean they contribute less to their retirement savings. A smart pension plan takes these changes into account and ensures that the desired savings goal is reached, even with lower contributions.

Conclusion: Take Control of Your Pension – with Caveo by Your Side

The BVG reform presents both opportunities and challenges. One thing is clear: the responsibility for a secure retirement increasingly lies with each individual. Instead of relying solely on political decisions, which often involve compromises and lengthy processes, you should actively shape your pension plan. At Caveo, we help you optimize and adapt your pension planning—individually, flexibly, and with your personal situation in mind.

Now is the time to take control of your financial future—book a consultation with us today and discover how to optimize and secure your retirement planning!