Low interest rates, rising life expectancy, pension reform. In Switzerland, we rely on three pillars for our pension provision. But these are currently more or less faltering. To what extent can we rely on receiving enough money in old age? Which pillar can we rely on?
The three pillars of the Swiss pension system are deliberately structured differently, they pursue different goals and you can get different amounts out of them. At the same time, the three pillars face different challenges. It’s worth knowing these so that you know what you can build on.
Pillar 1, the old-age and survivors’ insurance (AHV), is a social insurance scheme. It is compulsory for all residents of Switzerland, regardless of whether they are employed or not and regardless of their nationality. The AHV is intended to ensure that everyone has a minimum standard of living. People who are not gainfully employed, such as students, pensioners, the unemployed, housewives/househusbands and children, are also insured. You must pay contributions from January 1 after you reach the age of 17 if you are working, otherwise from January after you reach the age of 20. If you work beyond the normal retirement age, you must continue to pay contributions.
It is important to note that the 1st pillar is financed on a pay-as-you-go basis. Your contributions are immediately paid out to AHV recipients. Your AHV pension in old age is in turn financed by the contributions of younger generations. Here you can already see the problem: we are getting older, the birth rate is low and the younger generations have to pay for the older generations for longer. The system needs to be adjusted, that much is clear. Whether with the 2020 pension reform or a future reform.
Pillar 2, the BVG occupational pension scheme, is the retirement insurance for employees. As an employee or self-employed person, you can choose to pay contributions to a pension fund. This is where you accumulate your individual cushion for old age. The 2nd pillar is funded. It is also coming under pressure due to increased life expectancy and falling interest rates.
Pension funds invest your money in order to generate returns and to be able to pay you a little more for your contributions in old age. Pension funds must ensure that they can meet their benefit obligations at all times. This is why they continue to invest your assets mainly in bonds and real estate, the value of which fluctuates less than the value of shares. Every year, they have to credit your account with a minimum interest rate that is reviewed annually by the Federal Council and then set, which was last fixed at 1 % in November 2017. As interest rates have been falling for years, pension funds have been increasingly shifting into investments with expected higher returns and a correspondingly greater fluctuation range, such as equities, for some time. Nevertheless, you must expect that the minimum interest rate will not rise again in the next few years and that you will have to make higher contributions in future to maintain your pension level because the return on investment achieved by pension funds is lower than it used to be.
Pillar 3 is a voluntary pension plan. Pillar 3a is a tax-privileged form of pension provision. You can currently pay in CHF 6,768 per year tax-free and thus create a further cushion for your retirement. Pillar 3 is also funded and therefore also affected by the low interest rate environment. With many pillar 3a accounts, you currently only receive 0.2 % to 0.3 % interest on your assets. You may save taxes, but you may lose assets through inflation. If you invest in pillar 3a funds, you can earn higher interest, but you also bear the corresponding risk on the stock market. Either way, the 3rd pillar is usually simply necessary to close pension gaps and cover your needs in old age, as the following example shows.
The example shows the pension situation of an unmarried man with an income of CHF 78,000. In the pension fund we have calculated with the current conversion rate at retirement age 65, in the 3rd pillar with 0.4 % interest and a regular payment of the maximum amount. Smolio gives you a quick overview of your pension situation with all 3 pillars: With the AHV, which caps your pension at a maximum, with the pension fund, where you also get more depending on the contributions you have made, and with the 3rd pillar, which you can draw on up to a certain amount. You can set the parameters of your pension yourself on Smolio.
Mach den ersten Schritt zur finanziellen Unabhängigkeit
In einer Minute siehst du deine Vermögensentwicklung und dein Einkommen während der Rente.
Last update: 14.12.2024 18:09
