Pension fund: The key to retirement provision

For many working people, the pension fund, in which they save capital for their retirement, contains the largest part of their assets. Often, they accumulate several hundred thousand francs there. But the majority, 57% of employees, are not even aware that the money belongs to them. This is the result of the Fairplay study from 2022 conducted by Zurich Insurance Company Ltd and Vita Joint Foundations together with the Sotomo research institute. One important reason for this view: The money for the pension fund is deducted directly from your salary.

Yet for many people, the capital from the pension fund is the most important source of income in old age: Their pension from the 2nd pillar is financed from it. However, under certain conditions, pension fund assets can also be used to start a business or to buy your own home.

With the pension from the 2nd pillar, everyone saves for themselves – at least in theory. This is because at the moment, previous pension pledges can no longer be fully financed, among other things because of rising life expectancies and low interest rates.

Therefore, the pension funds have no option but to finance the pensions of today's retirees using the investment returns of those currently working. According to a study by the Institute of Insurance Economics at the University of St. Gallen (HSG) from 2021, on average around CHF 1,000 are redistributed annually for each working contributor. Depending on the situation, there may also be gaps in the 2nd pillar – due to unemployment, part-time work, periods spent abroad or because a person only came to Switzerland in adulthood. 

The 1st pillar, the OASI, is also facing major challenges. Its pensions are all paid from one large pot – based on what is called the pay-as-you-go system. This dates back to a time when people had many children, and there were many more young workers than pensioners. There is already a funding gap today. This gap is set to become even larger once the baby boomers retire. At the same time, as in the 2nd pillar, there may also be individual contribution gaps in the 1st pillar: Only those who have paid contributions for 44 years (men) or 43 years (women) without interruption will receive the full OASI pension.

What does this mean for us as the insureds? The Swiss 3-pillar retirement provision system is one of the best in the world. However, the 1st pillar (OASI) and the 2nd pillar (occupational retirement provision) need to be reformed to ensure they remain viable in the future. In addition, many people have one gap or another in their government retirement provision or in their occupational retirement provision. Generally, you can count on about 60% of your previous occupational income from the 1st and 2nd pillars together – if there are no major gaps. Without a reform of the first two pillars, this amount will decrease in the future.

Making your retirement provision a priority and addressing it accordingly is vital: What is my personal pension situation? What payments can I actually expect from the 1st and 2nd pillars? Is this income sufficient for me, or would I rather have more money available? If I would like to have more financial freedom, the 3rd pillar offers me many opportunities to save or invest money. 

An individual pension consultation at Zurich provides an overview of the three pillars and shows ways to improve your personal pension situation. Because only those who understand retirement provisions will be able to take their future into their own hands. Make your retirement provision a priority!