More money in old age: Why is there no 13th pension from the pension fund?

How is this possible? On the one hand, this is due to the fact that it is insured in a so-called closed fund, where only pensioners are located. Traugott N. worked for many years at the Zellweger Luwa industrial holding. After his retirement, the company was dissolved and sold.

Active members went to the new pension funds, retirees remained in the old fund, the Zellweger Luwa Community Foundation. Given sufficient funds, the money should last until the last pension recipient dies. This is not a general rule, but those who live longer with closed funds leave more money.

But that’s just one reason. The other is that Traugott N.’s fund is a very good fund even when he is working. When the former quality engineer retired 20 years ago, the coverage rate was 150 percent; this was an absolute peak value. Even then there were special distributions for pension recipients. It is, of course, pure luck that Traugott N. is insured by one of Switzerland’s best health insurance companies.

Pension institutions are well managed, nothing more

Unfortunately, very few insured people are as lucky as Traugott N. The overall average of pension institutions is well managed, but nothing more. Anyone looking for excellence in the Swiss pension fund system needs to get out their magnifying glass. Good investment performance is absolutely crucial to the amount of pension. Anyone who has calculated compound interest knows this.

An example: Nora is 50 years old and has saved 300,000 francs in PK. He spends the remaining 15 years of his working life in a fund that pays 1.5 percent interest on his assets. He is 65 years old and has savings of 375,000 francs (excluding deposits). Nora’s best friend is better off: She’s insured with a fund that offers an average interest rate of 3.5 percent. By the time she turns 65, she will have saved 502,000 francs.

The difference is over 125,000 francs, or 635 francs per month (with a 6 percent conversion rate). Calculated on a yearly basis, the difference reaches 7,620 francs; This corresponds to a maximum pension of three AHV!

Investment performance: Migros-PK is at the top, Publica failed

Industry association Swiss Asset Management Association (AMAS) recently highlighted the large performance differences between pension funds. Only a few pension funds have disclosed their return figures. Larger funds that do this show that Migros-PK achieved a net performance of around 20 percent in five years. In CS-PK, this rate was 17 percent. The PK of the city of Zurich reached almost 13 percent. On average, Swiss funds returned just under 10.58 percent. BVK of the Canton of Zurich (8.9 percent) and PK Post (10.4 percent) had below-average returns. The performance of Publica, the large pension fund for federal employees, was well below average (see chart).

But the graph also shows that low administrative costs alone do not make people happy. Funds that provide more expensive investment products and therefore have higher management costs often have a better net return than funds that look only at costs.

You hear the same dead-end arguments over and over again in debates on reforming pension provisions, which is why the conversion rate must be reduced and the retirement age must be raised. However, the sometimes bad investment results of pension funds are not discussed much.

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