My girlfriend recently got angry. At the age of 45, following an upcoming real estate purchase, she took a closer look at the pension fund and was quite disillusioned. The conversation with me motivated me to take a closer look at the subject😉.
Our life expectancy is constantly increasing; today the chance of living to be 100 years old is more than 10 times greater than it was 105 years ago (BFS). The world population of people over 60 will have reached 2.1 billion, according to a new report from the World Economic Forum. Many of them will outlive their retirement savings by eight to almost twenty years.
It is an ongoing problem that existing systems struggle to keep pace with social and technological changes and new living models and urgently require reform. Something is slowly happening, for example, the AHV21 reform will be implemented this year and two BVG initiatives will be voted on. We also all know that we need to make private provision in addition to the state systems so that we do not run out of money when we grow old.
One of the largest savings pots that many of us have is the accumulated assets in the company pension fund. More than 1,000 billion francs (2022) are stored in pension funds in Switzerland. But somehow this money seems very strange to us, since the SOTOMO survey shows that only about 44% of respondents consider retirement savings as their own asset.
According to the statistics of the BFS pension fund (2023), at the end of 2022 we had 1,353 pension funds in Switzerland with assets of 1,066 billion francs. The Shortage rose by almost a third to 39.9 billion francs. Capital withdrawal is still in vogue54,273 pensioners (+15.4% compared to the previous year) received a total of 13 billion francs in the form of a lump sum or partial lump sum in 2022. The average value of the capital withdrawal was 240,291 francs.
According to the UBS pension fund barometer, the pension funds surveyed will have achieved this in 2023 Return of 4.92% for 2023. Since 2006, the annualized return has been 2.96%. By comparison, the MSCI World Index recorded an increase around the end of 2023, according to Statista 22% compared to last year.
There is a lot going on in terms of precautions. From this year, AHV21 will come into effect and the retirement age for women will be increased. In addition, the Federal Council has the BVG minimum interestthis is the interest rate at which interest must be paid on the assets in the compulsory occupational pension scheme (wages between the entry threshold and the upper limit amount, i.e. between 22,050 and 88,200 francs, are compulsorily insured). The new interest rate is 1.25% (previously 1.00%). However, pension funds can also grant a higher interest rate.
The Minimum conversion rate (the rate that determines how your assets are converted into pension) will remain the same for the time being 6.8%. This applies to the mandatory part and would increase with the BVG reform 6% decrease. In practice, yes The conversion rate of your pension fund may be lower today, as the pension funds themselves can determine the conversion rate for the non-mandatory part and often calculate with a so-called wrap-around conversion rate instead of two conversion rates (mandatory and non-mandatory). According to calculations by pensionskassenvergleich.ch Average of all joint and collective foundations considered with an average conversion rate of 5.6 percent.
As a rule, we cannot choose our pension institution ourselves, unless you are self-employed or have your own company that is affiliated with a pension fund. However, it is wise to think about your company pension scheme. You will find information about this on your pension statement, in the regulations and in the pension fund report. Here are some points you should pay attention to:
- Coverage level: The coverage ratio shows what percentage of a pension fund’s liabilities are covered by assets. 100% or more is ideal. If the coverage ratio is lower than 100%, the fund has a coverage deficit.
- Ratio of active and passive insured persons: If your fund has many active policyholders, this is advantageous because unwanted cross-subsidies can be compensated.
- Interest: View the interest rates at which your pension fund pays interest on your assets.
- Conversion rate: In this sentence you see how your pension assets are converted into an annual pension. For example, if it is 6%, 100,000 francs in pension fund assets would result in an annual pension of 6,000 francs. Find out which method your pension fund uses to calculate the conversion rate and how it has developed.
- Return and investment strategy: can be found in the report or the investment regulations. Find out what strategy your pension fund has and what returns it generates. The proportion of shares in the pension fund’s portfolio is also crucial.
- Services in the event of disability or death and options to favor cohabiting partners7.
- Facilities model: Do you have the option to determine parts of your pension assets yourself, for example in the form of management plans or first arrangements?
If you would like to know more about your own pension fund or would like to have it calculated whether a purchase is worthwhile, you can contact bvgauskuenfte.ch, which will provide you with free independent advice.
If you are dissatisfied with your pension fundThen you can contact your employer directly or the pension fund committee of your pension fund. Other options include payments, for example to promote home ownership. Mortgage or self-employment.
What do you think of the company pension provision, what do you think could most advance the system? What would you wish for? I look forward to the discussion 😉
Source: Watson
I am Dawid Malan, a news reporter for 24 Instant News. I specialize in celebrity and entertainment news, writing stories that capture the attention of readers from all walks of life. My work has been featured in some of the world’s leading publications and I am passionate about delivering quality content to my readers.
