Better than a kick in the teeth! 
Interesting, thanks for sharing. Not sure this forum would agree with the assessment, considering all the discussions about crash which will happen soon 
Also interesting: the interest was 1% from 2017-2023. It was raised to 1.25% in 2024. The interested seems very much tied to the interest of national banks. Of course, this is in stark contrast to the development of the stock market.
Entscheidend für die Festlegung der Höhe des Mindestzinssatzes ist gemäss Gesetz die Entwicklung der Rendite der Bundesobligationen sowie der Aktien, Anleihen und Liegenschaften. Die Finanzmärkte haben sich 2025 gut und 2026 bisher ebenfalls positiv entwickelt.
Yeah I feel like with the era of low interest rate, funds are now a lot more diversified so being so close to the bond rate doesn’t make sense.
I think quite a few fund have over 115% reserve those days (could check the annual report I think they had numbers), hence the decoupling (and it would force the more conservative funds to diversify too).
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I don’t get why pension funds still exist. I’d rather have a segregated account i cannot touch and take the full risk of the asset allocation i choose. I got 3.25% out of 6.08% performance and a coverage ratio of 122%. Joke. There’s virtually no risk in investing in global equities only with 35y left to retirement.
Become self employed
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Few reasons:
- I’m not sure if my late dog has better or worse impulse control than most people
- likewise, he probably had about the same money management skills most have
- civilised societies need to at least try to help people not become destitute/start drugs/become criminals
- there’s risk with investing in global equities with 35y to retirement: sequence of returns risk (pre-empting the response: yes, you will almost certainly come out better even in the case of a 50% crash than having been at 1% for decades)
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I am pretty sure most would have chosen NVIDIA and the like now days with a huge risk of their pension to be very low when they reach retirement.
Capital+small interest guarantee + tax deduction + moderate performance of ~3.5% is a good package for the vast majority.
The goal is not top performance at all cost.
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There is also the stupid “safety contribution” which is literally just support for existing and to support the insurance aspect.
That‘s multiple hundred/month just vanishing, that could be part of your funds…
I however also agree the current system is likely a bit more beneficial for the average Joe. People just have no financial knowledge and this forces and moderately goof outcome.
I would be in favor of an opt-out system though, and/or the default being a kind of target date fund like setup.
I suppose the problem is when people opt-out and consume the savings or put them on meme coins etc. Who is going to feed them when they get old and penniless?
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That sounds like a very good idea, but its application should come with an exam paper, psychologist evaluation etc!
Well it’s their fault ain’t it? If they’re homeless why don’t they just…buy a house? People these days, so lazy, need everything done for them…
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You guys make good points of course.
Maybe the opt-out version would have some heavy restrictions in the sense of you can only pick from a set of selected index funds, or something along that line.
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You mean the 0-2% risk contribution you’d pay as employee?
That might pay monthly 80% of insured salary in case of disability, or maybe 40% / 10% for spouse and per kid in case of death.
Maybe not that relevant for all of us multi-millionaires in here, but I think that’s a pretty decent deal as far as this kind of insurance goes.
I guess the end justifies the means to have that included as mandatory, as well.
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How would that look like on a fund level?
At the moment there is one allocation for the whole fund.
Do you have ideas how a TDF for every insured person could work?
And in that case the performance would be different for each person. How would the interest payment look like in that case?
I am very happy with our pension system. I consider it the bond part of my portfolio, almost no risk, return good enough, R/R actually even very good. And very happy I do not have to manage the bonds on my own, I still cannot understand them. Just hope the general system will not collapse and/or the regulation be stricter in 30 years. Also do not forget the pension gives you the oppurtunity to buy in, reduce your tax, increase your invalidity and death protection.
I agree it could be better = more flex:
-the main problem: you cannot chose tge fund, the employer does (most of the time probably blindly)
-you cannot chose your asset allocation
It would be great it could be like vested fund or 3a, low cost funds, a few Basic allocations to chose from
The problem is at a young age, when the income is low and you have a long way to go, no children etc, the pension fund is going to be 100% of your AA. For many people it stays like that though, and they retire okay.
I like the CH fund system.
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Me too. It has a little bit of everything:
- Pillar 1: government managed
- Pillar 2: employer managed
- Pillar 3a: self-managed within guardrails
- Pillar 3b: do whatever you want
The risk is thus spread across four shoulders.
The more “do whatever you want”-solutions you have, the more poverty and/or government assistance there will be at age 65. People are stupid (and I don’t mean that in a derogatory way at all. I’m also stupid when it comes to things I don’t know much about).
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You raise good points, and currently I don‘t know how you‘d set that up for it to be able to work properly.
Maybe you could run say 3 different sub-funds as the pension fund.
Like a 80/20, 60/40, 40/60.
And you shift an individual persons account from 100% in the first gradually to 100% in the last.
So you just need individual accounts and run 3 internal funds in that case.
Estonia carbon-copied the Swiss three pillars system (P1 state social security, P2 employer-contributed pension funds, P3 private tax-deferred investments) - and in 2021 decided to make P2 employer-pensions “opt-out”.
The results are about as dumb as it gets; right during a time of high inflation everyone and their mother withdraw 2nd pillar, paid tax on it (hey, flat taxes at least) – and bumped up consumption good sales of, especially, TVs, washing machines and cars.
The smarter ones converted their 2nd pillars into rental real estate right during a time of low rates and quickly rising prices.
You may consider it a natural experiment of sorts (with Switzerland, the country carbon-copied from, as the comparison) – and the results argue very much against allowing opt-out.
Turns out people really are short-sighted with money and a bit of benevolent paternalism in system design really helps them 20 to 40 years later.
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Swiss pension funds are fairly good asset allocators. The only challenge are the „full coverage umbrella insurance solutions“. But even they are getting better again, as the longetivity situation is fully accounted for in the pension funds. Why change a winning system? Why give people the option to choose their pension provider? I don‘t see the point (orher than as said the insurance solutions). The only Problem I see are employers that no longer retire people (did Google ever retire an individual?). I would opt for a „risk loss compensation“ among pension funds, sinilar to the one in llace among health insurance providers.
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Opt out for everyone or just people entering retirement?
My point was opt-out and into other more freely choosable investment with certain guardrails. Not paying out the money to consume.
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Its an insurance that protects you from beeing robbed or murdered by a 70 years old that had nothing to lose. Without pension funds, we would need to invest loads of money in more law enforcement and gated communities.
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