Current Pension Fund Situation

Swiss pension funds are currently in a much stronger financial position than they were just a few years ago. Following the difficult market phases since 2022, the funding ratios of many pension institutions recovered significantly thanks to positive investment years. According to the Swiss Occupational Pension Supervisory Commission (OAK BV), the average funding ratio of private pension institutions reached around 117% again by the end of 2025. At the same time, average net investment returns remained at a positive level.

The Swisscanto Pension Fund Study 2025 confirms this trend. Average performance reached around 6% in 2025, although some pension institutions achieved significantly higher returns. As a result, actively insured members increasingly benefited from improved interest credited to their retirement savings. According to the study, the average interest rate credited amounted to approximately 4.3%, well above the current statutory minimum BVG interest rate of 1.25%.

Despite the overall positive development, major differences between pension institutions remain. Depending on investment strategy, insured population structure and financial risk capacity, interest rates and key figures vary considerably.

In occupational pensions, even small differences in credited interest can have a major long-term impact on retirement capital and future pension benefits. A difference of just 1–2% per year can result in several hundred thousand Swiss francs difference in retirement savings over decades. Significant differences also exist regarding risk and administration costs.

Regular reviews of pension solutions are therefore becoming increasingly important. Today, this is no longer just about comparing costs, but about a comprehensive assessment of the pension institution:

• How financially stable and sustainable is the pension fund?
• How attractive has the credited interest been in recent years?
• How high are the funding ratio and fluctuation reserves?
• Do benefits, costs and structure match the company’s needs?
• Is the chosen organisational model still appropriate?

These questions are becoming increasingly relevant as differences between pension institutions continue to grow.

At the same time, insured persons’ retirement behaviour is changing. According to the Swisscanto Pension Fund Study, only around 39% of insured individuals now choose an exclusively lifelong pension. The trend towards partial or full lump-sum withdrawals therefore continues.

The reasons are diverse:

• Desire for greater flexibility
• Individual wealth and estate planning
• Tax optimisation
• Independent investment strategies
• Partial retirement and flexible retirement models

While lump-sum withdrawals offer opportunities, they also involve risks. With a pension, the pension fund bears the longevity and investment risk. With a lump-sum withdrawal, this risk is transferred to the insured person. Given increasing life expectancy, long-term financial and liquidity planning is therefore becoming increasingly important.

Occupational pensions also remain highly dynamic from a regulatory and political perspective. In recent years, OAK BV has further specified its requirements and communications. In particular, collective and joint pension institutions are increasingly required to ensure that additional interest payments are financed sustainably.

In practical terms, this means that interest credited above the statutory BVG minimum rate should generally only be granted if sufficient fluctuation reserves are available and the institution’s financial risk capacity allows it. The purpose of this regulation is to avoid excessive risks and potential redistribution at the expense of future generations.

This also explains why some pension funds remain cautious with additional interest payments despite very strong investment years. Today, it is no longer short-term performance alone that matters, but above all the long-term financial stability of the pension institution.

Occupational pensions also remain under political scrutiny from a tax perspective. As part of the Federal Council’s “Relief Package 27”, proposals were made to increase taxation on lump-sum withdrawals from occupational pensions and Pillar 3a. Although these proposals were temporarily rejected by Parliament, the discussion clearly shows that lump-sum withdrawals are likely to remain a political focus in the future.

Occupational pensions are currently in a pleasingly stable condition. Many pension funds have strengthened their reserves and once again enabled insured members to participate more strongly in investment performance. At the same time, however, differences between pension institutions are becoming increasingly significant.

For companies, it is therefore more important than ever to review their pension solutions regularly — not only regarding pension benefits, but also in terms of interest credited, financial stability, sustainability of the interest policy and long-term strategic alignment.

A modern and well-structured pension solution remains a key factor for employer attractiveness, employee retention and long-term financial security.

Sources:
Swisscanto Pensionskassenstudie 2025
OAK BV – Oberaufsichtskommission Berufliche Vorsorge