From 2025 to 2027, the AXA Foundation for Supplementary Benefits will gradually lower its conversion rate to 4.6% for men and women retiring at age 65.
The adjustment will take place over a span of three years. This means insureds can plan with greater reliability, and it cushions any pension reductions, especially for people who are about to retire.
The former conversion rates of 5.0% for men aged 65 and 4.88% for women aged 64 will continue to apply to anyone retiring before the end of 2024.
It has no effect on existing retirement pensions or lump sums.
By adjusting the conversion rate, the AXA Foundation for Supplementary Benefits reduces the increasing redistribution so that more of the investment return will be available to pay interest on retirement assets. The current interest model will therefore be adjusted with effect from January 1, 2025.
Even an additional half of a percentage point in interest has a significant impact over the long term, as the following example shows:
The Board of Trustees is determined to provide a fair distribution of funds for all generations. To this end, it has also decided to introduce a pension participation model starting in 2025. After they retire, the insureds themselves will profit from the Foundation’s strong performance.
Insureds can count on robust supplemental retirement savings that offer capital protection and pension options at fair conditions.
The conversion rate is the percentage of the retirement capital you have saved up that is converted into an annual pension when you retire. A conversion rate of 4.6% means that every CHF 100,000 saved results in a pension of CHF 4,600 a year.
If the conversion rate currently in use is above the correct level from an actuarial (i.e. purely mathematical) point of view, then every time someone retires, the pension fund needs to have more capital in reserve than the assets that person has actually saved in order to fund his or her retirement pension. This is the reason for the ever-increasing redistribution of assets from working insureds to retirees. The difference between the assets accumulated and the capital actually needed is referred to as a conversion loss.
Up to CHF 2 million a year is currently being redistributed from working insureds to retired pensioners in the AXA Foundation for Supplementary Benefits, and the latest forecasts suggest that this will rise to more than CHF 4 million in the next five years.
This money should really be used to pay interest on the former group's retirement assets. If more of it could be used for that purpose, the effect of compound interest would increase their retirement assets over the long term compared with the current redistribution situation.
Each individual's future pension is different and depends on a range of factors, including how much retirement capital they have saved while working.
As a rule of thumb, retirement assets x conversion rate = annual pension.
Now you can also simulate your future pension in the myAXA pensions portal.
Nothing will change if you retire by the end of 2024. The current conversion rates – 5.0% for men retiring at age 65 and 4.88% for women retiring at age 64 – will continue to apply to you.
The following conversion rates apply to the voluntary retirement savings if you retire at age 65 in a transitional year:
The conversion rate of the previous year applies if you retire on January 1.
A standard conversion rate of 4.6% will apply to all men and women retiring at age 65 starting in 2027.
The adjustment of the conversion rate has no effect on lump-sum payouts.
No, nothing will change for you. The adjustment of the conversion rate has no effect on existing retirement, survivors or disability pensions.
You can find up-to-date information in your most recent annual benefits statement. Or you can look it up on the myAXA pensions portal.
The statutory minimum conversion rate, currently set at 6.8%, applies to mandatory assets in occupational benefits insurance, i.e. the minimum according to the Occupational Pensions Act. The AXA Foundation for Supplementary Benefits deals solely with voluntary contributions. Pension funds are free to set their own conversion rate for voluntary assets.
You can increase your personal retirement assets through voluntary buy-ins, provided you have not already reached the maximum buy-in amount. You should check beforehand how a voluntary buy-in will affect both your future pension and your tax situation. You can also save additional capital for your retirement in the third pillar.
For more information and frequently asked questions on the change in the conversion rate, please consult the Q&A as well as the additional documents.
