LPP fee: minimum rate increase to 1.75%

Context

At a glance

• LPP Commission requests increase of minimum rate from 1.25% to 1.75%
• 0.5 percentage point increase on mandatory pension funds
• Positive financial markets in 2025 and 2026 the basis for the request
• Final decision rests with the Swiss Federal Council

Key facts

• What: Increase of minimum interest rate under the second pillar (LPP)
• Institution: Federal Commission for Occupational Pensions
• Percentages: From 1.25% to 1.75% (increase of 0.5 points)
• Period: Positive markets in 2025 and so far in 2026
• Final decision: Swiss Federal Council
• Commission votes: 10 in favour, 4 against

The Federal Commission for Occupational Pensions (LPP Commission) has recommended to the Federal Council to raise the minimum interest rate on second-pillar assets from 1.25% to 1.75%. An increase of 0.5 percentage points that directly affects the pension savings of every Italian cross-border worker employed in Switzerland.

Legal parameters and market situation

According to the law on occupational pensions, the LPP Commission recalls in a released note, the parameters for this decision are the yield of Confederation bonds and the performance of stocks, bonds and real estate on the financial markets. In 2025 and so far in 2026, the markets have recorded a positive performance, a central element in the Commission's recommendation.

But the assessment did not stop at market data alone. The Commission also considered the overall financial situation of pension institutions, the evolution of wages in the country, inflation trends (rising prices), the actual returns achieved by pension institutions in previous years, the current interest rate policy and the estimated theoretical return of pension funds.

The 'overall positive' situation and residual risks

In light of this 'overall positive' financial situation, the LPP Commission argues, the rate should be increased. However, the federal body did not ignore the uncertainties and risks present in the global economic scenario, particularly the geopolitical risks that continue to characterise international markets.

The decision to recommend the increase was taken with 10 votes in favour against 4, indicating a solid majority within the Commission, although a significant minority opposed it. The LPP minimum interest rate represents a crucial legal guarantee for those working in Switzerland: it is the minimum return that employers must credit annually to their employees' pension funds, regardless of market performance.

Operational details

What the increase from 1.25% to 1.75% means for your retirement capital

The minimum interest rate under the LPP is not a variable market return, but a fixed legal guarantee. Every year your employer must credit to your individual retirement account a minimum percentage of interest on all contributions paid and on previously accumulated interest. Until now this minimum was 1.25%. If the Federal Council approves the Commission's recommendation, the new minimum will rise to 1.75%.

On paper, an increase of 0.5 percentage points may seem marginal. But when you calculate the compound effect over long periods—remember that the LPP is built on the logic of long-term accumulation, typically 30–40 years of working career—the difference becomes significant. Every year the new rate applies both to your paid contributions and to the interest already accumulated, creating an exponential growth effect.

A cross-border worker who accumulates capital in the second pillar over three decades will feel this percentage difference in the final capital available at retirement. It is not a huge figure, but it provides greater protection for your future purchasing power.

The role of the LPP Commission and how the decision-making process works

The Federal Commission for Occupational Pensions is not a political body, but an independent technical body. Its task is to formulate annual recommendations based on objective economic indicators: the return on Confederation bonds, the performance of equity markets and real estate markets. It is not a discretionary choice, but an assessment of data.

Its recommendation of 1.75% is now awaiting the formal decision of the Federal Council. Officially, the Federal Council is not obliged to follow the Commission's recommendation, although in practice it almost always does when the market context is clear and converging, as in this case with the positive markets in 2025 and 2026.

Implications for those working cross-border between Ticino and Italy

If the new rate is approved, the effect is universal and non-discriminatory: it applies to all Swiss pension institutions subject to the Occupational Pensions Act (LPP), regardless of the employee's nationality. If you are an Italian cross-border worker residing in Ticino or in the Lombardy border area and you work for a Swiss company, the new guaranteed minimum rate applies to you just like any other Swiss worker.

Your payslip you receive in Switzerland includes the employer's contributions to the LPP (typically between 7% and 18% of gross salary depending on age). A higher minimum rate on these funds protects your capital from any years of downturn in the financial markets and guarantees a predefined, secure growth.

Useful planning tools

To estimate your pension strategy, use the pension planner and the pillar 3 simulator.

Key points

How to monitor the decision of the Federal Council

The ball is now in the hands of the Federal Council. The LPP Commission has made its recommendation, but there is no official public deadline communicated in the source for the final decision. Typically these decisions are made in the autumn months, but you can expect the Federal Council to officially communicate the result via Swiss federal institutional channels.

As a border worker, the concrete steps you can take are:

1. Consult the website of the Secretariat of State for the Economy (SECO), where official communications on occupational pension decisions are published 2. Contact your employer or LPP fund administrator to ask when they will communicate the new rate to employees and how it will be implemented 3. Request the annual statement of your pension fund to verify the interest credited year by year 4. If you are in complex situations (more funds, changes of company, repatriation of funds to Italy), consult a tax advisor specialized in border matters

Tools to calculate the impact on your future income

Use the pension calculator on our website to concretely estimate how the increase in the minimum interest rate affects your final capital at the time of retirement. Enter your gross annual contribution paid to the LPP, your current age and the number of years

Source: swissinfo.ch