Increasing number of insured individuals choosing capital over pension

Withdrawing savings capital from occupational pension plans instead of relying on a pension is a popular choice nowadays, leading to lower pensions from pension funds. Many Swiss pension funds have reduced their pensions in recent years, causing concerns about having enough money in old age. This concern was a significant factor in the Swiss Federation of Trade Unions’ initiative to introduce a 13th AHV pension, which was accepted in March.

The capital saved in a pension fund is multiplied by the conversion rate to determine the total annual pension. Reductions in conversion rates by pension institutions result in lower annual pensions for retirees. New pension statistics published by the Federal Statistical Office last year showed that the median amount of newly paid old-age pensions from occupational pension schemes in 2022 was 1,217 francs for women and 2,077 francs per month for men.

However, these figures do not account for the fact that many people withdraw some or all of their pension fund savings upon retirement, which is not included in the pension amount. The debate on reduced pension fund pensions has sparked interest, with studies showing that overall benefits from occupational pensions have not decreased significantly between 2015 and 2022, despite lower pension amounts due to capital withdrawals.

The importance of capital withdrawals has increased, leading to lower pensions for retirees as the money is taken from their savings capital. Women’s benefits have actually increased between 2015 and 2022, while men’s benefits have fallen. The increased withdrawal of capital benefits from pension funds raises concerns about managing finances effectively in old age and potential risks in financial markets.

Calculating the expected cost of living in old age and ensuring coverage with regular income sources like pensions and rental income is recommended. Withdrawing capital from the pension fund should only be considered once the cost of living is covered. Risks of financial mismanagement or incorrect advice should be taken into account, especially with the interest of some financial advisors in managing assets after capital withdrawals.