The three-pillar system penalises the middle class

According to a recent Comparis analysis, the Swiss middle class no longer has a chance of maintaining their previous standard of living after retirement. A miscalculation in pillar 3a is said to be to blame.

The continuation of the accustomed standard of living, as stipulated in the Federal Constitution, is not possible for middle-income earners after retirement with the existing three-pillar system, claims a recent Comparis analysis. A miscalculation in pillar 3a is to blame, as Comparis pension expert Leo Hug explains: "The current maximum annual contribution allowed in pillar 3a is far too low. Women should therefore be able to pay CHF 12'400 annually and men CHF 10'100 into the pillar 3a. "

Does the Swiss pension system discriminate against middle-income earners?

The analysis of the online comparison service shows, that women with a gross income of more than CHF 96'000 per year and men with an annual salary of more than CHF 105'000 have no chance of maintaining their previous standard of living after retirement. Hug continues: "In this income bracket, it is not possible to continue the accustomed lifestyle in old age with AHV and occupational pensions alone, as well as the funds from the tax-privileged pillar 3a." This is true even if, analogous to the AHV, the maximum permitted pillar 3a amount has been paid in for 44 years (men) or 43 years (women), according to Hug. Because in contrast to the higher salaries, over CHF129'060 per year, there is no possibility for the middle class to make additional tax-optimized provisions with 1e pension plans.

Men should be able to pay CHF 10'100 into their pillar 3a

An unmarried man with an income of CHF129'060 (which, according to Comparis, corresponds to the annual salary for middle managers or professionals) and an average life expectancy of 85 years still needs around CHF 717'500 in savings at the time of retirement, in addition to pensions from the AHV and occupational benefits, Hug calculates. This is the only way he will be able to maintain his current standard of living for the next 20 years. He would therefore have to be able to pay a little over CHF 10'100 per year into pillar 3a from the age of 20, assuming an average interest rate of 2%. "That is currently not possible. Currently, the maximum contribution allowed is CHF 6'883 per year," Hug explains. He adds, "Male singles with an annual salary of CHF 120'000 should be allowed to contribute CHF 8'950 per year to the tied pension plan. With a gross salary of CHF 110'000, CHF 7'660 would be required. "

Career women would have to pay in much more

According to Hug, women in middle management have an even worse chance. On average, they would be 3 years older and retire one year earlier. "So for 24 years, in addition to AHV and occupational pensions, they must be able to fall back on private pension funds," Hug says. And he calculates: "With an annual income of CHF 129'060, they would have to pay in about CHF 12'400 a year from the age of 20 until retirement. With an income of CHF 120'000, around CHF 11'000 would be required annually for the tied pension plan, and with an income of CHF 110'000, slightly more than CHF 9'400. "Women would therefore have to be allowed to pay 83% more into pillar 3a than is currently permitted.

Persons with incomes in the range of the BVG mandatory benefit

In contrast, Comparis considers a revision of the mandatory occupational pension scheme to be unnecessary. "Depending on the estimate, only around 15% of BVG-insured persons are entitled to a conversion rate of 6.8% anyway. However, a network of supplementary benefits is already available for incomes in the BVG mandatory range, which would absorb any pension losses," Hug says, explaining his assessment. He has also calculated that people without significant assets in Lausanne, for example, would achieve almost the same level of pension income after taxes with supplementary benefits, as former employees with the maximum BVG salary. This is taking into account that supplementary benefits are not taxed and recipients would not have to pay Serafe taxes.