Retirement barometer Swiss pension shrinks by 20 percent in 22 years

While AHV pensions have been adjusted to inflation and increased by 19 percent since 2002, pension fund pensions have fallen by 39 percent: pensioners have less and less in their wallets.

Keystone-SDA

19.08.2024, 12:53

SDA

The working population in Switzerland is receiving less and less money when they retire. According to the retirement barometer published today by the VZ Wealth Center, the pensions that a 55-year-old expects to receive when they retire in ten years' time shrank by a fifth between 2002 and 2024.

This corresponds to an average pension decrease of a good CHF 15,000 per year, according to the survey. AHV pensions have risen by 19 percent because they have been repeatedly adjusted in line with inflation. At the same time, however, pension fund pensions have fallen by 39 percent.

The AHV and pension fund pensions now each account for around half of the pensions paid out. In 2002, the ratio was still 2 to 1 in favor of the pension fund.

Situation will continue to worsen

But it is actually even worse. "If you compare the expected pension with the pension that is actually paid out ten years later on retirement, the picture becomes even bleaker," writes the VZ.

A 55-year-old who had expected a pension of just under CHF 75,000 per year in 2002 received a pension of just under CHF 70,000 on retirement, around 7 percent less than expected. This loss has since increased to 10 percent.

And according to VZ, the situation is likely to get worse. The reason for this is the reduction in the minimum conversion rate, which has fallen from 4 percent to the current 1.25 percent in recent years. Moreover, most pension funds only apply this rate to mandatory pension plans, while an even lower conversion rate applies to non-mandatory plans.

Ratio of pension to final salary is falling

The VZ also analyzed how high the effective pension is compared to the last insured salary. Around 50 years ago, it was politically stipulated that AHV and pension fund pensions together should amount to at least 60 percent of the last salary. "But they are doing less and less," concludes VZ.

Two decades ago, an employee with an annual gross income of CHF 100,000 received an average of around 62% of their final salary as a pension after retirement, according to the calculation. Today, this figure is 52 percent, which is below the target value.

The gap is even greater for higher incomes. "Anyone earning CHF 150,000 a year can expect a pension that is only around 43% of their final salary. In 2002, it was still around 58 percent," it says.

Still a major concern

The reason for this is that the pensions of higher earners fall particularly sharply when the conversion rate falls. This is because they have usually also saved more in the pension fund due to their higher salary, especially in the extra-mandatory scheme. For lower incomes, where the AHV still accounts for around two thirds of the total pension, the reductions due to the conversion rates are far less noticeable.

Although VZ concludes that pensions are also likely to fall in the future, according to a survey, employees are less worried about their financial future than they were a year ago. One of the reasons for this is that the stock market performed well last year and the SNB's interest rate cuts eased the burden on many mortgage holders' budgets.

The AHV reform in force since the beginning of the year and the yes vote for the 13th AHV pension increased confidence in the AHV, while the higher projected retirement pension on the pension fund statement - due to the recent slight increase in the BVG minimum interest rate and higher insured salaries - increased confidence in the pension fund. All in all, however, a clear majority are still concerned about the security of AHV and pension fund pensions.