According to latest Pension certificate for 2nd pillar projected retirement assets with interest has decreased by 10000CHF. As a consequence projected benefits on retirement at age: 60-65 has decreased as well.
I suspect it is due to interest paid on compulsory part of retirement assets that dropped from 1.25% to 1.0%
Is it expected and normal practice? Does the "interest paid on retirement assets" correspond to yield on my and my employer monthly contributions?

Noone can guarantee you now how much you'll get when you retire. The legislation can still change a hundred times before that. They show you a teasing calculation merely with currently effective interest rates, which just got lowered this year.

Yes, both yours and employers contributions are pooled together and interest is paid on the total.

After a HUGE insurance deduction.........