2024-02-24 17:54:53
Supporters of a 13th AVS pension emphasize its necessity to compensate for the drop in pension fund pensions. But according to certain analyses, the policyholders themselves precisely contribute to weakening the level of pensions by withdrawing a lot of capital.
Othmar von Matt / ch media
The Swiss Insurance Association (ASA) is redoubling its efforts and banking on the last moments of the campaign to derail the project of a 13th AVS pension submitted to popular vote on March 3.
The president of the ASA, Stefan Mäder did not hide it during an interview with the Blick. “Fortunately, occupational pension provision for old age, survivors and disability was introduced on a compulsory basis in 1985.” The pension fund annuity supplements the AVS, but is compulsory for most workers. Mäder’s key argument is the following: thanks to occupational pension provision, there is no need for an additional AVS pension.
The left analyzes things completely the opposite. “The level of new LPP pensions has fallen by 20% in thirteen years,” estimates national advisor Roger Nordmann (VD). For a retirement taken in 2010 with a pension fund asset of 300,000 francs, the average annual pension amounted to 20,220 francs. In 2023, it would only reach 16,110 francs, or 4110 francs less.
Roger Nordmann (PS/VD)Keystone
This represents 6,500 francs less pension per year for an asset of 500,000 francs. Considering an average life expectancy of 20 years for a 65-year-old person, the total loss between 2010 and 2022 amounts to 130,000 francs, according to the specialist company VZ. The elected official’s conclusion is clear:
“We must compensate for this weakening of the second pillar by strengthening the first. A 13th pension is therefore completely justified”
. For his calculations, he relied on studies on pension funds from Swisscanto, which questions more than 500 entities each year on their development.
Reduced administrative costs
“The decisive parameter is the conversion rate of capital into annuity,” explains Nordmann. “According to Swisscanto data, the average effective conversion rate for 65-year-old men fell from 6.74 to 5.37% between 2010 and 2023.”
What is the conversion rate?
The conversion rate is used to determine the amount of your annual LPP pension based on your retirement assets accumulated in your pension fund. There is also a minimum conversion rate set by law for the obligatory part of the LPP, which is currently 6.8%. For example, with a conversion rate of 6.8%, a retirement capital of 100,000 francs will result in an annual pension of 6,800 francs after retirement. (jah)
The legal conversion rate of 6.8% only applies to the obligatory part of the retirement assets. However, most policyholders also have an optional asset for which the funds can freely set the conversion rate. It is often significantly lower, between 5 and 5.5% depending on VZ.
“The poor performance of the second pillar is due to excessive administrative costs and poor investment returns”, again according to the Vaudois:
“The increase in life expectancy is not enough to justify such a reduction in benefits”
For the Confederation, on the other hand, this is indeed the case. The unfavorable context linked to the interest rate would also play a role.
For Roger Nordmann, it is clear that if the 13th AVS pension is accepted, a “fundamental reform” of the second pillar will still be necessary. Starting by tackling administrative costs. “They amount to 6.8 billion francs per year, including 5.1 billion for wealth management alone”.
Retirees are withdrawing their money en masse
The drop in the conversion rate partly explains the reduction in annuities. But there is another reason: more and more young retirees are withdrawing all or part of their capital from the second pillaras revealed by Trade newspaper and the Blick.
Lukas Müller-Brunner, director of Asip, the Association of Pension Institutions, confirms this. He speaks of an “exorbitant amount”. In 2022, 11.5 billion francs would have been withdrawn:
“It is clear that if we take the capital and give up a full pension, we have less money for retirement”
In statistics, this translates into lower pension payments. Lukas Müller-Brunner goes even further. Without all these capital withdrawals, pensions would have doubled, he estimates:
“If we look at the average of new annuities between 2015 and 2022, they have fallen by around 7%. But taking into account the increased number of capital withdrawals, pensions would have increased by almost 8%.
Müller-Brunner therefore criticizes Roger Nordmann’s calculation. “Simply comparing conversion rates over time and concluding that pensions are being reduced is not serious. In reality, most pension funds ensure that people can maintain the level of benefits. This is done on two levels, according to the expert:
- “Either they inject money themselves for transitional measures.”
- “Either they strengthen the savings process in the long term in order to have more money available at the time of retirement.”
Pressure from the financial industry
At Publica, the Confederation’s pension fund, 50% of policyholders now receive capital upon retirement. Director Doris Bianchi confirms this. “We are observing a clear trend towards capital withdrawal in a mixed form”, she specifies. Part of the funds is received in the form of capital, another in the form of annuity. We can even deduce a general rule:
“The lower a person’s retirement assets with our institution, the more they tend to withdraw their capital”
The choice of capital began when pension funds replaced the primacy of benefits (guaranteed annuity) with the primacy of contributions (annuity based on payments). And it has become even more pronounced with drops in the conversion rate. Bianchi observes that the financial industry “clearly directs people to receive their money in one go”.
And she confirms: pension funds have largely increased savings contributions to compensate for the drop in conversion rates. Ultimately, it is therefore the policyholders who bear the costs. Because the second pillar does not provide for a redistribution model like the AVS.
As director of Publica, Doris Bianchi is neutral regarding the 13th AVS pension. She nevertheless notes: “This vote highlights the lack of transparency regarding the situation of seniors in terms of income.”
(Translated from German by Valentine Zenker)
The retailer Migros fired a long-time employee because she did not want to work without her veil. Other well-known Swiss companies, such as Swiss Post or Valora, handle the subject differently.
Migros is accused of discrimination. As written 20 minutes, the distributor fired a cashier without notice because she had decided to wear the veil. She filed a complaint against the company.
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