Vita Collective Foundation: Additional interest paid out despite challenging market situation
The returns of many pension funds remain at a low level and the cover ratios have increased only slightly over the course of the year. Nevertheless, the insured of the Vita Collective Foundation can look forward to an additional interest payment. Interest of up to 1.45 percent will be paid on retirement assets in the coming year.
The 2023 investment year is far more stable than 2022, although the threat of a recession has been weighing on the financial markets since the middle of the year, leading to greater volatility. Negative interest rates are a thing of the past and in the longer term the Vita Collective Foundation will benefit from higher interest rates on bonds. The return on the overall portfolio is solid: Since the beginning of the year, the net performance of the Vita Collective Foundation has amounted to 3.88 percent. Current information on the cover ratio and performance can be found at vita.ch.
Indicative cover ratio of 103.06% as at the end of November 2023
As at the end of November 2023, the indicative cover ratio of the Vita Collective Foundation was 103.06%. The cover ratio of 102%, which is a prerequisite for the distribution of additional interest, was thus exceeded. "Our insured are already receiving additional interest in the current year, 2023. And we are delighted that we will once again be able to provide them with additional interest in 2024," says Werner Wüthrich, Managing Director of the Vita Collective Foundation.
Interest on retirement assets
The Vita Collective Foundation is one of the few foundations on the market to be communicating the interest rate on retirement assets for the coming year. Determination of the interest paid on retirement assets is made in accordance with a clear regulatory mechanism: additional interest is paid from a cover ratio of 102%. The base interest rate corresponds to the statutory BVG minimum interest rate, which is currently set at 1.25 percent by the Federal Council. As a result, in 2024 the Vita Collective Foundation will pay interest on total retirement assets as follows:
Annual retirement provision affiliation
Interest rate
2020 or earlier
2021
2022
2023
2024
Total interest earned
1.45%
1.40%
1.35%
1.35%
1.25%
Base interest
1.25%
1.25%
1.25%
1.25%
1.25%
Additional interest
0.20%
0.15%
0.10%
0.10%
0.00%
Vita Classic conversion rates for the years 2024 to 2026
In order to counteract the redistribution in the second pillar and to be able to offer all the insured a sustainable and fair retirement provision solution, the Vita Collective Foundation adjusts the conversion rates in line with the current situation. This takes account of changes in market circumstances and higher life expectancy. The conversion rates for the years 2024 to 2026 for retirement at the reference age are as follows
from January 1, 2024
from January 1, 2025
from January 1, 2026
Men
5.60%
5.50%
5.40%
Women
5.60%
5.55%
5.50%
The reference age for women will rise
The reference age for women is gradually increasing from 64 to 65. These legal provisions come into force on January 1, 2024. Women born in 1960 will retire at the age of 64, while women born in 1961 will retire at 64 years and three months. For men, the reference age remains unchanged at 65. This has already been considered in the pension certificate for 2024. The conversion rates for the previous year apply to insured persons with a pension start date of January 1. The pension regulations 2024 is available at vita.ch/downloads.