Glossary
Conversion Rate
The Conversion Rate determines how accumulated retirement savings in a pension fund (BVG / 2nd Pillar) are converted into an annual pension. A Conversion Rate of 6.8 per cent means that CHF 100,000 in retirement savings generates a lifelong annual pension of CHF 6,800.
At a glance
- The statutory minimum Conversion Rate in the BVG mandatory segment is 6.8 per cent (source: BVG Art. 14).
- In the supra-mandatory segment, pension funds may apply lower rates.
- The rate depends on life expectancy and the technical interest rate used by the fund.
Frequently asked questions
A lower Conversion Rate produces a smaller annual pension from the same retirement savings. Rising life expectancy and low interest rates are the main reasons for declining rates, making it important to monitor how your pension fund applies this calculation.
Part of the topic
Vorsorge & Pensionierung
Sources: Bundesamt für Sozialversicherungen (BSV) · Systematische Rechtssammlung (fedlex)