A government commission looking at the rate, called for a reduction to 0.75%, while unions demanded a rise to 1.25%. In the end the Federal Council decided to take the middle road and leave the rate at 1% for 2019.
The rate is the minimum pension funds must apply to employment related 2nd pillar pension assets in 2019.
Some pension funds are concerned about the long term effect imposed rates of return are having on the financial health of pension fund balance sheets.
Rates of return on some asset classes funds invest in are very low in Switzerland. This month, the Swiss government issued 14-year bonds at a rate of 0.5% and the Swiss National Bank continues to charge banks negative interest on money held there.
The Federal Council argued that while the rates of return on some assets are low this is compensated by higher rates elsewhere. The Swiss Performance Index (SPI) rose 19.9% in 2017, it said.
With inflation forecast at less than 1% in 2019, the 1% minimum rate should probably at least maintain the real value of pension assets.
However, the key takeaway is probably to save more and work for longer.