Occupational pension: minimum LPP rate proposed at 1.75% for 2027 (cross-border guide)

Context

In a nutshell

• LPP Commission recommends 1.75% minimum rate for 2027
• 0.50 percentage point increase from current 1.25%
• Final mark: 10 votes to 4
• Final decision rests with the Federal Council

Key facts

• What: Recommendation to increase the minimum interest rate LPP
• When: 31 August 2026 (recommendation for 2027)
• Where: Bern
• Who: Federal Commission on Occupational Welfare (LPP Commission)
• From: 1.25% (current rate)
• A: 1.75% (proposed rate)
• Change: +0.50 percentage points
• Vote: 10 in favour, 4 against

The Federal Commission on Occupational Pensions (LPP Commission) recommends to the Federal Council to raise the minimum occupational pension interest rate to 1.75 percent by 2027. The projected increase is 0.50 percentage points compared to the current rate of 1.25 percent. The recommendation was formalized on August 31, 2026 in Bern, at the end of the final vote that recorded 10 votes in favor and 4 against.

The criteria behind the decision

The Commission examined three options: increase, maintain or reduce the rate. The law indicates as fundamental parameters the performance of the Confederation's bonds and the performance of shares, bonds and real estate. Financial markets showed a positive trend in 2025 and, so far, also in 2026.

In addition to market returns, the Commission assessed

Operational details

The change from 1.25% to 1.75% marks a substantial increase in the minimum return that pension institutions must pay on old age in the compulsory occupational pension scheme (LPP/BVG). The Commission itself defines the increase as "considerable", indicating a willingness to reflect the good financial situation of the sector, while maintaining a margin of caution in the face of geopolitical uncertainties.

What the minimum rate actually means

The minimum interest rate LPP is the minimum guaranteed return that each pension institution must credit on the old age of policyholders in the mandatory scheme. An increase of 0.50 percentage points affects the annual revaluation of pension accounts: all other things being equal, a higher credit score generates, year after year, a faster growth in the capital allocated to income.

The proposed rate is a minimum. The joint supreme body of each pension fund — composed equally of representatives of employers and workers — may decide on a higher rate, provided that the financial sustainability of the institution allows it. This means that individual funds with solid capital returns could offer more favorable conditions to their policyholders than the federal benchmark.

The market context

The recommendation is part of a scenario characterized by financial markets in positive territory

Useful planning tools

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

Key points

The LPP Commission's recommendation opens a decision-making phase that concerns millions of workers and insured employees in Switzerland. Here is what you need to know and what concrete steps may be useful in the coming weeks.

How the decision-making process works

1. The LPP Commission formulates the recommendation (which took place on 31 August 2026). 2. The file is examined by the UFAS/BSV, which operates under the supervision of the DFI. 3. The Federal Council evaluates the proposal and decides on a possible change to the minimum interest rate. 4. The decision is published and enters into force with the planned effective date (for 2027, according to the recommendation).

What to do as an LPP-insured worker

• Check with your employer or pension fund the interest rate currently applied to your retirement savings in the mandatory scheme.
• Consult your personal pension certificate, which indicates the interest rate and the year-by-year evolution of your retirement savings.
• Follow the official communications from your institution, which will have to adapt to any new rate set by the Federal Council.
• If in doubt, contact your trade union or the joint body of the pension fund for clarifications on the application of the rate.

Difference between the minimum rate and the effective rate

The recommended rate of 1.75% is a legal minimum. The supreme joint body of your pension fund can decide on a higher rate if the financial situation of the institution allows it. It is therefore possible that the rate actually credited to your retirement savings is higher than the federal parameter.

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