Conversion rate

The conversion rate of a pension fund is the percentage used to calculate the annual retirement pension based on the existing retirement assets. The conversion rate in the BVG mandatory pension scheme is set by the Federal Council – based, among other things, on average life expectancy and the technical interest rate (expected return on pension fund capital). Retirement assets multiplied by the conversion rate result in the annual retirement pension. Decreasing conversion rates lead to lower pensions. Each pension fund can set the conversion rate for the extra-mandatory part of the retirement assets individually.