Swiss pension schemes will be bankrupt within 10 years unless Switzerland’s government wins public support for a radical overhaul of the retirement system, experts have warned.
The pressure on Switzerland’s occupational pension system, which accounts for SFr800bn ($840bn) of assets, has intensified this year due to recently imposed charges on cash accounts and shrinking government bond yields.
Martin Eling, professor of economics at the University of St Gallen, estimated that occupational pension funds will face a SFr55bn hole in their funding by 2030 if the government does not overhaul the system.
Occupational pension funds are legally required to pay retirees an annuity equivalent to 6.8 per cent of their total savings on an annual basis. This conversion rate is considered unsustainable given that it was devised in 2003 when life expectancy was lower and performance expectations were higher.
Mr Eling said: “This is not a sustainable situation. If we continue like this for 10 years the pension funds will be bankrupt and the companies [that pay into them] will have to be involved [in their rescue].”
