The Swiss pension system: stability and security for your future
- Maike Stroetmann
- Jan 9
- 4 min read
Have you ever thought about how you will be secured in old age? The Swiss pension system is one of the best in the world and offers a solid foundation for your financial security in retirement. But why is that and how can you benefit from it? Let's take a look at the three-pillar system together and examine the advantages, but also the challenges.
The Three-Pillar System of Switzerland: An Overview
The Swiss pension system is based on the so-called three-pillar principle, which is anchored in the Federal Constitution. It was developed to ensure financial security in old age, in the event of disability or for survivors.
The three pillars in detail:
First pillar: State pension (AHV/IV)
The first pillar is based on a generational contract, similar to that in Germany. This means that those currently in employment pay the pensions of current retirees with their contributions. However, this pay-as-you-go system only works if enough young people pay into the system. Demographic change - fewer young people and increasing life expectancy - poses challenges for the system.
Example: You pay into the AHV during your working life. Later, when you retire, you receive monthly payments that cover your basic needs.
Find out how much you have already paid into the AHV and what benefits you are entitled to: AHV statement
Average payout: Women received an average of CHF 1,884 per month in 2022, men CHF 1,862.
Source: Statista
Second pillar: occupational pension scheme (pension fund)
The second pillar supplements the AHV and enables you to maintain your usual standard of living in retirement. Employers and employees jointly pay contributions into an individual pension account.
Example: Your employer transfers part of your salary into your pension fund every month. This money is invested for you and you can benefit from the returns later.
Advantage: The invested portion of your contributions enables you to benefit from the development of the financial markets and build up additional capital.
Tip: Would you like to find out more about your second pillar? Ask your employer for information about your pension fund plan and additional contribution options.
Average payout: Men received an average of CHF 30,000 per year in 2020, while women received only around CHF 11,500 – a significant difference that is often due to part-time work and lower wages.
Third Pillar: Private Pension Provision
The third pillar is voluntary and gives you the opportunity to close individual pension gaps. Pillar 3a in particular offers tax advantages.
Example: You can pay money into a Pillar 3a account on a monthly or annual basis in order to be able to access a larger sum later – and at the same time benefit from tax advantages.
Why is the Swiss pension system so successful?
In international comparison, the Swiss pension system is one of the best in the world.
Here are some reasons:
three-pillar principle
The combination of state, occupational and private pension provision creates a broad and stable basis for your financial security. Each pillar has a clearly defined task and optimally complements the others.
Source: https://socialesicherheit.ch/de/das-drei-saeulen-system-der-schweiz-im- international comparison/
High transparency and integrity
The Swiss pension system enjoys a high degree of trust because it is clearly regulated and transparent.
Source: https://www.finanzen.net/nachrichten/geld-karriere-lifestyle/rentensysteme- worldwide-these-are-the-ten-best-pension-systems-in-the-world-10772981
Flexibility in the third pillar
The third pillar gives you the opportunity to make individual provisions and save or invest for your pension with state support.
challenges of the system
The Swiss three-pillar system offers a solid foundation for retirement provision through its three pillars. However, this only applies if you work at least 80% of the time.
This is where family life can bring challenges, especially for women, when career breaks or part-time work come into play.
Challenges for Women in the Three-Pillar System
Part-time work and the 2nd pillar : Occupational pension provision (2nd pillar) is often geared towards full-time work. In part-time work, the so-called coordination deduction is deducted from income, which means that a smaller portion of the salary is insured. This can lead to significant gaps in pension provision. For example, with a 60% workload, only 36% of the annual salary is insured in the 2nd pillar, while with full-time work it is 61%.
Career breaks : Breaks in employment, for example due to childcare, can affect the development of professional experience and networks. This reduces the chances of promotions and salary increases, which has a negative impact on pension entitlements. In addition, studies show that women in part-time jobs are less likely to be promoted and therefore have fewer career opportunities.
Gender differences in pension provision : On average, women's pensions are 37% or almost CHF 20,000 per year lower than men's pensions. While women's AHV pensions are only 3% lower than men's pensions, this difference is 63% in occupational pension provision.
What can you do?
Raise awareness : It is important to be aware of potential coverage gaps and take action early.
Use Pillar 3a : Women should make full use of the possibilities offered by private pension provision (3rd pillar) to close financial gaps.
Get advice : Individual pension advice can help you develop the optimal strategy for your personal situation.
For a detailed calculation of the impact of raising children and working part-time on retirement provision, it is advisable to use specialised advisory services or online calculators. https://cashorcrash.ch/
It is crucial to act proactively and be fully informed in order to avoid financial disadvantages in old age.
Sources:
This article offers you a comprehensive overview so that you can plan your pension well informed. 😊
コメント