From January 2027, a certain employee pension fund is going to be aligned with the acquiring company’s pension fund and the conversion rate “Umwandlungssatz” will change from 4.74% to 4.3%.
The company has said they will compensate with a lump sum in 2027 so that we will end up with the same pension.
Has anyone else on here modeled what this will look like? The lump sum is going to have to be pretty significant for most pensions (70k or so)
Talking about the merger between Credit Suisse and UBS pension fund? Not every day such an exercise happens for 100’000 active employees and x pensioners!
The conversion rate is just one factor. In order to model the change, one would also need the following info:
The contribution rates across age groups
The interest rate (which, of course, can change over time)
The contribution rates are approximately the same across the age groups. The strange thing is, neither the blue nor the red company’s pension fund know what the calculation is yet and it is only a little over a year to go.
Given the number of employees affected, the total lump sum could be hundreds of millions. It’s very strange.
UBS started making provisions already last year.
Interestingly, the pension funds are not merging. This involves harmonizing pension models.
So the pension funds will be harmonized and will run in parallel. As of recently, ex-Credit Suisse people were deemed to be inferior and thus were on the chopping block. Let’s assume many of them will be let go.
Less and less active employees will contribute to the CS pension fund. More and more people will transfer their money to a vested benefits account while looking for new jobs. Meanwhile retirees will continue to withdraw their pensions. As new contributions and the capital shrink, I imagine the usual processes to balance risks will become more difficult. To the point where UBS finally will need to take over the CS pension fund.