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The voting date is approaching, supporters and opponents of the initiative for a 13th AHV pension are increasing their activities. According to recent studies, the initiative has a good chance of being accepted, but traditionally the yes camp usually shrinks a bit in recent weeks. It will probably be tight.
One of the strongest arguments of the trade unions behind the initiative is a graph: it shows that the average new pensions in the pension fund system (BVG) have fallen in recent years. The requirement is that the AHV must be expanded to compensate for the loss of purchasing power.
This article was first published in the paid service of Handelszeitung.ch. Blick+ users have exclusive access as part of their subscription. You can find more exciting articles at www.handelszeitung.ch.
This article was first published in the paid service of Handelszeitung.ch. Blick+ users have exclusive access as part of their subscription. You can find more exciting articles at www.handelszeitung.ch.
“The low capital gains in the BVG lead to lower pensions compared to ten to fifteen years ago,” union chief economist Daniel Lampart said in a recent interview with Handelszeitung. And a ‘fact check’ from the trade union federation from February shows: ‘Pension fund pensions have already fallen by 13 percent in real terms since 2005. Especially in recent years, they have literally melted away.”
A look at federal statistics initially appears to prove the union members right: between 2015 and 2022, initial pensions for newly retired people actually fell. From an average of 27,825 francs per year to 25,873 francs most recently, in nominal terms, i.e. without taking inflation into account. The pension fund system is eroding. Or maybe not?
Only half the truth
Research by the Handelszeitung shows: The new pension statistics give an incorrect picture. There is no doubt that conditions for new retirees have deteriorated. The so-called conversion rate, with which the saved capital is converted into a pension, has fallen for almost all pension funds. From an average of 6.05 percent in 2014 to 5.2 percent in 2022. The same savings amount resulted in a 14 percent lower pension. But that’s only half the truth.
At the same time, capital withdrawals upon retirement have also increased enormously. Instead of leaving their money in the pension fund and taking it out as a pension, more and more retirees are withdrawing capital. Some of these are pension assets that cannot be converted directly into a pension, for example because they are in an acquired benefit account.
The figures are impressive: in 2015, R7.5 billion was withdrawn from the PF system upon retirement. By 2022, the amount will rise to 14.8 billion francs. And this does not apply to early withdrawals in the years before retirement. The effect is clear: there is no money in the pension funds and the pensions are correspondingly lower. But it has not disappeared, because retirees can use it.
Higher capital benefits
Lukas Müller-Brunner, director of pension fund association Asip, confirms the effect. “The claim repeatedly made by left-wing and trade union circles that pension fund benefits are continually declining is demonstrably false,” he said. “It is true that the average pension amount decreases when you draw it for the first time. However, the higher capital payments can more than double this effect.”
The Handelszeitung has calculated how high the average pensions would be if the capital from pension funds and benefit institutions had also been converted into a pension.
And then everything suddenly looks different. The total pension calculated in this way is considerably higher: around 40 percent in 2015, more than 60 percent in 2022.
Not only does the assumed decline no longer apply. Average pensions have even increased since 2021. Despite the lower savings interest rate and lower conversion rates, new retirees started with more pension than in previous years.
Asip director Müller-Brunner comes to a similar conclusion based on his own calculations: “In the years 2015 to 2020, new pensions without capital fell significantly, by a total of almost 10 percent. If you take the capital withdrawals into account and cancel them, you get almost the same benefits,” says Müller-Brunner. “Capital withdrawals have increased significantly since 2020, which means that the amount of benefits even increases if you calculate everything in pension form.”
The trade union federation does not accept the accusation
Do the unions then advertise with false statements? Gabriela Medici of the trade union federation does not want to accept the accusation. It is actually “not satisfactory” that it has not yet been possible to directly link capital withdrawals in the official statistics of new pensioners to pension payments. “The statement that pensions would even increase slightly if capital contributions are taken into account seems implausible and is also contradictory to other publications from banks and pension specialists,” says Medici. The recorded decline in pensions is not the only indication of a “declining performance of the second pillar”. She is referring to lower interest rates and falling exchange rates.
In fact, it is not a good sign for the pension system if more and more retirees prefer to withdraw their money rather than be guaranteed a lifelong pension. Reasons for this likely include conversion rates, which many now consider too low. Apparently many retirees assume that they can invest their money better than their pension fund.
Source:Blick
I am Liam Livingstone and I work in a news website. My main job is to write articles for the 24 Instant News. My specialty is covering politics and current affairs, which I’m passionate about. I have worked in this field for more than 5 years now and it’s been an amazing journey. With each passing day, my knowledge increases as well as my experience of the world we live in today.
