Research Findings: Escalating difficulties in retirement
In a recent survey conducted by AXA IM Alts, Swiss citizens have shared their views on their financial security for retirement. The findings reveal a mixed picture, with some areas of concern and others of optimism.
The survey shows that Swiss people generally rate their financial security for retirement as good to very good, with a value of 58%. However, this figure has recovered from a low of 58% after the COVID-19 pandemic.
When it comes to bridging potential financial difficulties in old age, Swiss people are most willing to save on luxury goods, charitable purposes, further education, or travel. The survey also found that 60% of participants reject the higher taxation of capital withdrawals from the second pillar, and only 20% support the alignment of taxation between capital and pension withdrawals.
The survey participants expressed concern that not enough is being saved today, which may result in insufficient funds in the first and second pillars in the future. Two-thirds of those surveyed expect they will not be able to maintain their accustomed standard of living with AVS and LPP alone.
The survey highlights the challenges faced by people with lower incomes, non-working persons, and many women, who will have to restrict themselves disproportionately in old age and have limited opportunities to close pension gaps. The highest rejection of the tax alignment is found in the right-wing political camp at 71%.
To improve financial security for pensioners, the Swiss government should consider reforming the pension system. Measures such as flexible retirement age, increasing capital funding of the first pillar (OASI) by nearly doubling the fund size and investing contributions in capital markets, lowering thresholds and individualizing the second pillar, and increasing contributions and investments in the third pillar could help. These targeted capitalisation efforts aim to sustainably close funding gaps rather than relying on ongoing deficit financing.
Additionally, strengthening oversight to ensure better market stability and investor protection and maintaining social safety nets like supplementary benefits for low-income pensioners are important. Swiss people would also make significant cuts to an additional car if finances became tight.
Interestingly, the number of those who want to save by eating out or visiting restaurants has more than doubled within a year since the last survey. There is little room for savings in housing and health costs, according to the survey participants.
40% of survey participants express concern about the current savings rate, with 45% of surveyed Swiss men and women expecting to rely on supplementary benefits in old age. Swiss people express opposition to further tax burdens.
Werner Rutsch, a member of the management team at AXA IM Alts in Switzerland, emphasized the importance of addressing these challenges to ensure a secure retirement for all Swiss citizens.
