Calculating your pension shortfall in Switzerland

1. What costs do state and occupational pensions cover?

The Federal Constitution (FC) stipulates: “State (OASI) pensions must adequately cover living expenses” (Art. 112 FC). The state pension (first pillar) – combined with occupational pensions (second pillar) – should ensure “the continuation of the accustomed lifestyle in an appropriate manner” (Art. 113 FC).

In reality, however, the OASI pension often does not cover living expenses. That's why the Supplementary Benefits Act came into force on 1 January 1966. It still exists today, although it was originally intended only as a stopgap – until the introduction of the compulsory occupational pension.

The current occupational pension fund system was introduced in 1985. Yet even with this, the usual standard of living is usually still not guaranteed after retirement.

2. What does a pension shortfall mean?

The difference between the costs of maintaining your normal quality of life and the first and second pillar benefits is called a pension shortfall. You can close your pension shortfall by depositing savings into the third pillar.

3. How much money do I need for retirement at a minimum?

The minimum OASI pension for unmarried people is 14,700 francs and 29,400 francs per year for married couples (as of 2024).

However: this is not enough. When calculating the supplementary benefits (available in German only), the OASI scheme assumes a basic requirement of 20,100 francs for individuals and 30,150 francs for married couples. What’s more, the costs of rent and healthcare depend on where you live.

4. How much money do I need to maintain my usual standard of living?

Originally, legislators assumed that the OASI scheme and the occupational pension would together amount to 60% of previous earned income and thus sustain the retiree’s standard of living. In reality, this is often too little.

Generally speaking, you’ll need 80% of your last income to maintain your standard of living after retirement.

5. What costs are no longer relevant in retirement?

The biggest change concerns savings. According to the Federal Statistical Office, individuals under the age of 65 save an average of 12.4% of their gross income; couples save as much as 18.5%.

After 65, the percentage saved by individual households drops into negative territory. For couples aged 65 and over, it still amounts to 1.8% of gross income. People over 65 also have fewer expenses related to eating out, transport and housing.

6. What costs increase after retirement?

The costs of healthcare are higher in old age. The tax savings after retirement are rather low despite a lower pension income. This is because as a pensioner, you can no longer make occupational deductions or pay into pillar 3a.