The conversion rate is used to calculate the annual retirement pension from the retirement assets accrued in pillar 2 (pension fund). The lower the conversion rate, the lower the pension. At present, the statutory minimum conversion rate is 6.8 per cent.
If you have saved 100,000 francs in pillar 2, a conversion rate of 6.8 per cent means that your pension will be 6,800 francs per year.
The conversion rate has already fallen for everyone who earns more than 84,600 francs per year: this change was applied through the back door, as it were, to the non-mandatory component of people’s pensions. The statutory rate will fall in the compulsory portion sooner or later, too. It is not a question of whether, but of when. As the conversion rate goes down, so do pensions.