Close pension gaps
Pension shortfalls: the questions you need to answer!
The benefits from state and occupational pensions are not usually sufficient for maintaining your standard of living after retirement. Comparis explains the consequences of this for your pension – and how you can calculate your pension gap.
16.01.2023
iStock / Khanisorn Chaokla
1. What costs do Oasi and BVG cover?
The Federal Constitution stipulates in Article 112 that pensions from the AHV and the 2. The pillar must adequately meet the need for existence. According to Article 113, the AHV, together with the pension fund pensions, is to ensure "the continuation of the usual standard of living in an appropriate manner".
Habitual lifestyle is not guaranteed
These two requirements have never been met. Since its introduction, the AHV has not been sufficient to make a living. That is why the Supplementary Benefits Act came into effect on 1 January 1966. It was intended as a transitional solution until the introduction of compulsory occupational pensions.
Pension gap = benefits from AHV and pension fund – costs for the usual standard of living
In 1985, the current pension fund system was introduced. But the accustomed standard of living is still not guaranteed. The difference between the costs of the accustomed standard of living and the benefits of the AHV and pension fund is called the pension gap. You can use private savings in the third Close.
2. How much money do I need at least in my old age?
How much money does a pensioner need? The minimum AHV pension for single persons is CHF 14,340, for married couples CHF 28,680 per year (as of 2022). The maximum pension for single persons is 28,680 francs, while the maximum pension for married couples is 43,020 francs.
That's too little. For the calculation of the supplementary benefits, the AHV assumes a basic requirement of CHF 19,610 for individuals and CHF 29,415 for married couples. In addition, there are location-dependent costs for rent and healthcare costs.
For the city of Zurich, the livelihood for single tenants is around 42,000 francs and for tenants in a two-person household around 61,000 francs. Thusis in the Federal Republic of Germany has around 39,000 francs as the subsistence minimum for single-person households and 58,000 francs for two-person households.
3. How much money do I need to maintain my usual standard of living?
Originally, the legislators assumed that AHV and pension funds could reach 60 percent of the last income from employment and thus maintain the standard of living. In fact, the usual standard of living is much higher.
According to the Federal Statistical Office, the net income of individuals aged 65 and over is 81% of the income of individuals aged 65 and under. In couple households, it is 77 percent.
The data of the Swiss household statistics allow an approximation to the financial requirements for the continuation of the usual standard of living. They confirm the rule of thumb that 80 percent of the final income is needed to maintain the previous standard of living at retirement age.
4. What costs are eliminated with retirement?
The most important factor is the savings share. Individuals under the age of 65 save an average of 13 percent of their net income, couples even 21 percent. After 65, the share of savings falls to 1% for single households and to 3.5% for couples.
People over 65 also have lower costs in the areas of gastronomy, transport and housing. In return, healthcare costs are higher. On the other hand, despite lower pension income, the tax savings are rather small, as it is no longer possible to make occupational deductions and the payments into pillar 3a are eliminated.
5. Calculating the pension gap in Switzerland: how to do so
To calculate your personal pension shortfall, compare your expected post-retirement income with 80 percent of your pre-retirement income. You can see how this can look like in the example calculation.
Cost illustration:
Insured person born in 1976, with no contribution gaps
| Gross annual income before retirement | CHF 86,000 |
|---|---|
| Required income after retirement | CHF 68,800 |
| Maximum state pension (OASI) – pillar 1 | CHF 29,400 |
| Occupational pension (2nd pillar) | CHF 20,770 |
| Annual pension from pillars 1 and 2 | CHF 49,450 |
| Pension shortfall after retirement | CHF 19,350 |
Source: Comparis pension calculator
This article was first published on 09.09.2020
