There is a pension looming collapse of up to 30 percent

make negative interest rates, Investment opportunities, and the Ageing of the society – the three problems to make the pension funds more and more. The challenges have increased in the past year. So 65 percent of the pension funds from the negative interest rates the Swiss national Bank are affected. Four years ago, it was 55 percent. The proportion is likely to increase due to the pressure on Margins of banks, writes the Swisscanto Vorsorge AG in their current study.

The benefits of the occupational Pension scheme (2. Column) have been falling for years. So the conversion rate has declined since 2010, from 6.7 to 5.7 per cent – which is 15 percent lower pensions. With the conversion rate, the annual Pension is calculated.

coverage gaps

The pensions will continue to decrease, if not timely counter-measures are to be initiated. The technical interest rate, which shows how high the accumulated pension capital may be subject to interest, is 1.9 percent. It is assumed that this value remains constant, this results in a more realistic conversion rate of 4.9 percent – instead of the current 6.8 percent. According to the calculations of the Swisscanto Pension to those workers who join today, a pension Fund, threatened, on average, 28 percent lower pensions.

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the gap, have instituted many precautionary services are not independent measures. Of the Swisscanto surveyed pension funds, more than half have increased in the last three years, the savings contributions, and a quarter of the institutions has extended the contribution period. In this case, the entry was lowered to age below the legal threshold from 25 years to 20 or even 18 years of age.

These measures would plug the gaps in Coverage but only half of it, writes Swisscanto. In order to close the gaps completely, the authors propose the swisscanto study, various measures – including the increase in the savings contribution of 17.9 percent or a lengthening of the contribution period of 7.2 years.

More money in real estate investing

the authors of The study write, but also that to stabilise the pensions, "the game room on the system side, better use needs to be". You criticise the lack of risk appetite of the pension funds. This would rely on a supposedly safe investment, although this yield virtually no return. Of shares share in the total assets of the pension company has changed despite years of well-informed stock markets, on average, only slightly – from 27 percent ten years ago to 29 percent last year.

Risk-taking the pension funds in another asset class. Strong is the real estate portion of the Portfolios is rising. While the proportion of Bonds declined since 2009, from 39 to 31 percent, and increased the investments in real estate from 19 to 25 percent. Thus, the risks in the event of Overheating and a correction in the real estate sector, losses are on the rise.

The Swisscanto Pension has consulted for the pension Fund study, 531 Swiss pension funds, with around 3.8 million Insured. (Editorial Tamedia)

Created: 06.06.2019, 14:33 PM