SWITZERLAND - Winterthur, the life insurer owned by Credit Suisse Group, has cut its payments to Swiss occupational pension beneficiaries as part of a series of changes to its employee benefits business.
The group described the move, which come into force in January 2004, as “unavoidable”.
The changes centre around the BVG/LPP minimum interest rate, which is set by the government.
Winterthur said the rate could not be achieved by means of risk-free investments alone and the current annuity conversion rate, “which is no longer realistic in view of increased life expectancy.”
For 2004, the rate of interest on retirement assets will be set by Winterthur at 2%, plus any surplus income from investments which will be passed on to the collective foundations.
As for the conversion rate - that is the rate which is used to convert contributions into a pension - will be lowered from 7.2% to 5.454% for women and to 5.835% for men. Current retirement pensions will not be affected by these changes.
“The environment surrounding employee benefits in Switzerland is proving to be very challenging for pension funds, collective foundations and companies,” said the firm.
“Against this background, Winterthur has developed a new model, which has been approved by the supervisory authorities. The model places employee benefits for all involved parties on a sustainable footing and thereby helps to secure the Swiss pension system in the long term.”
Other features of the revamp included a distinction between mandatory and extra-mandatory insurance and the an expansion of the foundation's board of trustees to include employer and employee representatives in addition to those of Winterthur Life.
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