Pensioner Johann Meili (77) has been paying contributions for decades but receives only a small pension: “I have lost all confidence in the second pillar.”

Insurers can set premiums

The reason bonuses rose rapidly: Meili’s company had a higher than average number of disability cases. In his penultimate year at HTG, only 38 cents of every franc he paid went into his retirement capital. The majority of the remainder was consumed by risk contributions and administrative expenses. 9996 francs in a year.

Meili’s employer resisted this, but to no avail. The supervisor of the Federal Private Insurance Administration dismissed the complaint. Everything is legal. Depending on the company and the pension fund, insurers may determine cost- and risk-based premiums based on their own calculations.

HTG subsequently terminated the contract with National Insurance but was unable to find an ongoing solution. Meili’s savings ended up at the second column recovery facility. Conditions here: quite modest. Therefore, it is not surprising that Meili says today: “At that time, I lost all confidence in the second pillar.”

Bought an annuity – “a mistake”

Frustrated, Meili decided to withdraw his entire pension capital of approximately 400,000 francs. “A mistake,” he says today. Because she bought herself an annual income with some of the money. Since then he has been receiving 800 francs a month, but this was only possible until his 85th birthday. Then it’s over.

He would do much better with his pension from the rescue facility. In his case, this amount would be around 1,850 francs and would be paid for the rest of his life.

Men receive an average of 2,900 francs per month

The vast majority of pensioners are better off than Meili. According to current social security statistics, men receive on average around 2,900 francs per month. In 2022, only 44 percent of new retirees will receive their entire retirement capital as a pension. 36 percent paid off their entire capital after retirement. 20 percent chose a mix of retirement and lump sum withdrawals.

These 2900 francs are just an average figure. First of all, they say little about the pensions of poorly positioned pension funds. Many retirees will need additional benefits sooner or later. And this despite the fact that, like Johann Meili, they have worked full-time all their lives and have been paying PF contributions for over 40 years.

“There may be pension funds where you have no chance of getting a good pension despite high contributions,” says PK expert Stephan Wyss from consultancy Prevanto. If PF is underfunded and there are many retirees, the insured is in bad hands.

So how do you realize that the situation is out of control and the pension will be less than expected? For example, one company made major staff cuts, Wyss says. Then the number of pension recipients will automatically increase and the initial position of the PF will worsen.

If the pension fund then waits a long time until it adapts to worse conditions, does not reduce the conversion rate and does not create additional provisions, sooner or later the fund will face the danger of restructuring. For policyholders, this means less interest on retirement savings and wage cuts due to pension fund restructuring. “Pensions in this case could be up to 20 percent lower than the appropriate interest rate on retirement savings,” Wyss warns.

Retirees are well taken care of at Migros

Johann Meili’s fate stands in stark contrast to the situation of approximately 85,000 insured people in the pension fund of the large distributor Migros. You can look forward to your retirement relatively comfortably. This is illustrated by an example calculation: Anyone who works full-time for a large distributor throughout his life and earns an average of 75,000 francs can expect a good pension of 3,100 francs per month. And he is 64 years old, because Migros currently has a lower retirement age. Moreover, although the Migros-PK conversion rate is quite low at 4.77 percent.

There are reasons why PK can pay such high pensions. Migros covers 17 percent of PF contributions; employees are required to pay only 8.5 percent of their insured wages. Currently, the high coverage rate of 124 percent gives confidence to the insured. PK is on such a solid financial footing that it was able to pay three percent interest on its retirement savings last year. The legal minimum rate was one percent in 2023. Anyone who retired from Migros-PK before January 1, 2023 can look forward to a 5 percent increase in their pension.

Money is pouring into the old Swissair

Things are even better for the remaining 2,800 retirees of the former Swissair, who belong to the SAirGroup APK general pension fund. Among Swiss pension funds, it is Kroesos. The pure pensioners’ fund has significantly more capital than it needs to provide the promised pensions. Therefore, he regularly pays additional pension.

For policyholders, 2022 was like 365 days of Christmas. They were receiving 23 months’ pension, not twelve. The average pension per person was 4,814 francs per month. Many people working until retirement are likely to have more income at AHV and PK than they did at Swissair at the time.