The amount of the pension in the defined contribution plan depends on how much money an insured person has accumulated. The accumulated retirement savings are converted into an annual pension at the time of retirement.
A conversion rate of 6.8 % is currently applied in the compulsory BVG contribution. CHF 100’000 of retirement assets thus provides an annual pension of CHF 6’800. At least a quarter of the retirement assets can also be withdrawn as a lump sum.
The defined contribution plan thus differs significantly from the defined benefit plan. In the defined benefit plan, the pension is determined proportionally to the last insured salary.