Interest on Capital in Pension Plan and Capital Plan 2019

Definitive interest rate applied to retirement savings capital in the Pension Plan (incl. ER Account) for 2019

The Pension Fund Board decided at its meeting of 12 December 2019 to set the interest rate to be applied to the retirement savings capital in the Pension Plan at 4%, with retroactive effect from 1 January 2019 (definitive interest rate pursuant to Art 20 item 1, letter b). An interest rate of 4% will also apply for the retirement savings capital in the Early Retirement (ER) Account with retroactive effect from 1 January 2019, pursuant to Art 11 item 1.

This means the interest rate for the mandatory and extra-mandatory retirement savings capital in the Pension Plan (including the ER Account) is 3% above the BVG minimum interest rate and is therefore significantly higher than for many other pension funds. Based on this interest rate, an amount of approximately CHF 42 million of the surplus earned will be distributed to the active insureds of the Pension Fund Swiss Re. The interest rate is valid for all those who are active insureds on 31 December 2019 as well as all persons who took retirement between 1 January 2019 and 31 December 2019.

In making this decision, the Pension Fund Board took into account financial market developments while also ensuring that the Pension Fund Swiss Re maintains robust fluctuation reserves so as to be well positioned to manage any future capital market turbulence. Strong fluctuation reserves make it possible to award a healthy interest rate even when market performance is poor, as was the case in 2018, for example.

Over the last eight years, the interest rate for the Pensions Plan has averaged 2.81% which is more than double the BVG minimum interest rate for the same period.

Interest rate to be applied during the year to retirement savings capital in the Pension Plan (incl. ER account) for 2020

Due to the low interest rate environment, the Pension Fund Board will retain its cautious interest rate approach for 2020. At its meeting of 12 December 2019, the Board therefore decided to set the interest rate to be applied during the year to retirement savings capital in the Pension Plan for 2020 at 0.25%, pursuant to Art 20 item 1, letter a.

Definitive interest rate applied to savings capital in the Capital Plan for 2019

At its meeting of 12 December 2019, the Pension Fund Board confirmed the interest rate to be applied to savings capital in the Capital Plan for 2019 will remain at 0%, pursuant to Art 44 item 2.

Active insureds benefit from a capital interest rate guarantee for the Capital Plan. This means that when the Capital Plan is paid out (for example upon leaving the company, retirement, transfer abroad, death, 100% disability), the insureds receive at least their contributions and buy-ins plus any interest awarded by the Pension Fund Board (calculated over the entire membership period). Furthermore, they can benefit from the performance of the UBS AST2 EA Kapital Plus 2019 fund. In the event of benefits being paid out, insureds will always receive the higher of the two amounts – the value of the savings capital or the value of the fund units. This means that insured members have no risk of loss due to price falls, but can enjoy 100% of price increases.

Interest rate to be applied during the year to savings capital in the Capital Plan for 2020

Due to the capital guarantee, the Pension Fund Board decided at its meeting of 12 December 2019 to set the interest rate to be applied during the year to savings capital in the Capital Plan for 2020 at 0%, pursuant to Art 44 item 2.

A prudent approach to managing the capital of insureds and retirees is the highest priority for Pension Fund Swiss Re.