SWITZERLAND – ARE ‘PENURY’ PENSIONS ON THE HORIZON?

 Pensioners are receiving ever-shrinking pensions. So much so that even those who earn a good living will have to learn to live modestly after the age of 65.

Financial insecurity among older people

"When comparing the amounts paid to pensioners with the standard of living of the rest of the population, it is clear that the Swiss seem to be off to a bad start. Indeed, 23.4% of older people receive less than half the average Swiss salary." See the article: Retirement and Investment – Why not look into property abroad instead?

In November 2017, this article finally highlighted the precarious state of Swiss pensions (the lowest in Europe relative to the cost of living)

"Due to the fall in pensions since 2012, workers earning less than 84,000 francs a year will struggle to make ends meet once they retire." See the article: Retirement: the Swiss will have to 'tighten their belts'

Here too, last June, we noted that over 50% of pensioners will no longer be able to continue living in Switzerland if they do not want to fall into poverty and become dependent on social welfare benefits, as so many of our elderly already are.

The article below explains the following situation clearly, albeit cautiously:

"During your working life, if you do not start thinking as soon as possible about investing wisely in order to manage your savings and recurring returns, when you reach retirement you will starve or live in misery, dependent on social security, waiting for death!"

A fine prospect after 45 years of hard work? No?

Admittedly, there will be senior civil servants and those on very high incomes who will have no problems (good for them), but for the whole of the working poor in the middle class, there is only one solution: investing in secure income-generating products that will enable them to generate returns so they can enjoy a well-deserved, comfortable retirement

To this end, we cannot recommend anything more highly than rental, tourist or long-term investment property.

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Alain Farrugia

The Swiss need to start thinking about their retirement sooner and begin saving earlier too.

He is Swiss and was earning over 6,500 francs a month at the age of 65. He paid into his pension fund all his life. This average citizen is now retired. And he now receives just 4,230 francs a month – the same as a working poor person in Switzerland. This is despite the fact that his AHV pension is at the maximum level. These figures were calculated by the Swiss Trade Union Federation (USP) based on federal data.

And this is worrying, the Tages-Anzeiger highlighted on Thursday. For the first time since the introduction of compulsory old-age provision, pensioners’ pensions have fallen sharply in recent years.

According to a study by Swisscanto, the average pension received by a pensioner (1st and 2nd pillars) fell from 5,357 francs in 2013 to 4,741 francs in 2017. That is a drop of 600 francs a month over four years. And it’s not over yet, according to the collective foundation that manages the occupational pensions of over 50,000 employees in Switzerland.

Average incomes also affected

This decline is not felt solely by those on low incomes or those who have experienced career breaks. “Even people on average incomes now receive a retirement pension equivalent to a low salary after retirement,” emphasises Felix Wolffers, co-director of the Swiss Conference of Social Welfare Institutions (CSIAS).

And with a pension of 4,230 francs a month, a pensioner has to live very modestly today, explains Max Klemenz, co-head of debt counselling in the canton of Zurich. He does the maths: once you’ve deducted essential expenses – taxes, rent, health insurance, etc. – there’s 1,800 francs left to live on. That’s for food, drink, clothes, insurance, the phone, the internet, transport costs and healthcare costs. It’s impossible to put anything else aside. So you have to learn to live modestly once you retire, he believes.

60% of final salary

Yet our social security system is supposed to enable pensioners to maintain their standard of living after retirement. It’s even in the Constitution, the Tagi points out. The combined total of occupational pension and AHV benefits must indeed amount to at least 60% of the final salary. In 2013, pensions were still so high that they amounted to more than 80% of salary, according to Swisscanto. This figure fell to 71% last year. And many pensions are already below this rate today, particularly for high earners.

Will pensioners therefore have to rely on social security in future? Not for the time being, as they can currently apply for supplementary benefits (PC) to top up their pensions if necessary, experts point out. But if pensions continue to fall, more and more older people will have to rely on PC. This means that, under pressure, these benefits could well be reduced, they fear.

“Save earlier”

According to Thomas Gächter, professor of social security law at the University of Zurich, “if nothing changes, we will become a nation of supplementary benefit recipients”. Already today, 12% of pensioners – 204,800 people – depend on them.

So how can people avoid finding themselves in a difficult situation when they retire? “People need to start thinking about their second pillar sooner so they can offset the drop in pensions,” advises René Raths of Swisscanto. Above all, the Swiss need to start saving earlier. “If you only start calculating what you’ll receive in retirement at the age of 55, it’s already too late,” he warns.

Source: 20 Minutes