Swiss residents are living longer than ever before, impacting the amount of pension money they will receive in old age.
Switzerland has one of the world’s highest life expectancies, with its population living, on average, well into their 80s.
This is due to good living conditions coupled with easy access to high-quality healthcare, among other factors.
READ MORE: Why living in Switzerland means you’ll (probably) have a longer life
But longevity is, in a way, a double-edged sword: on one hand, it’s a positive development, but on the other, it has financial consequences – for instance, in terms of pension pots.
That’s because the longer people live, the longer they rely on the pension money they accumulated while working.
Longer lives, less money
This is what emerges from a new analysis, the ‘Pension Barometer 2026’, carried out by the VZ Wealth Management Centre.
It particularly points to a drastic decline in occupational (second-pillar) pensions, designed to enable pensioners to maintain their standard of living in retirement.
READ MORE: What is Switzerland’s ‘second pillar’ pension and how you will benefit from it?
The study found that, due to longer life spans, pensions in Switzerland have fallen by 16.4 percent in the last 20 years, or by 12,260 francs.
VZ’s sample calculation shows that a 55-year-old today with an annual income of 120,000 francs can expect to receive an annual occupational pension of 62,660 francs upon retiring at age 65.
In 2002, the figure was significantly higher: 74,920 francs.
These numbers in context
These numbers, however, need to be put in context.
The monthly pension may be decreasing, though the total amount of money sitting in a pension fund is not.
But because retirees are living longer, the money has to be ‘rationed’ so as not to run out while the recipients are still alive.
Consider this: someone turning 65 today will likely live four years longer than a person of the same age did 20 years ago. Consequently, pension funds have had to lower the conversion rate – the key factor determining the monthly payout.
Here’s another example from the VZ analysis to illustrate the relationship between longer lives and lower payouts.
Someone who retired in 1985 with a retirement balance of 500,000 francs received an annual pension of around 36,000 francs.
Today, that figure would be approximately 26,000 francs.
However, because statistical remaining life expectancy has simultaneously risen from 14.9 to 20.4 years, the total pension payout – at around 530,000 francs – remains practically the same it was back then.
In other words, the annual pension is lower, because it is paid out for a significantly longer period.
