A recent OECD study, which looks at retirement, shows the relatively large amount spent on pensioners in Switzerland.
© Marian Vejcik | Dreamstime - Click to enlarge
Switzerland consumes 11% of its GDP on retirees, compared to 9% across OECD nations.
Despite this high spending, the risk of poverty is higher in Switzerland than across the OECD. According to the organisation, 19% of those over 64 in Switzerland are at risk of poverty, compared to an OECD average of 13%.
On average, basic Swiss retirement incomes are 45% of former salaries. Across the OECD they are 63%. Income increases when voluntary pension contributions, excluded from the study, are included.
The study looks only at income and does not include personal wealth.
Other things highlighted in the study are the relatively small rewards given to those who delay retirement, and Switzerland’s unequal retirement ages: 65 for men and 64 for women. Israel and Poland are the only other OECD nations that discriminate based on gender.
The report highlights slow progress in increasing the retirement age. Only three countries have retirement ages over 68: Denmark, Italy and the Netherlands.
Longer retirements and aging populations are raising concerns about the sustainability of current pension systems say the authors. Progress on increasing retirement ages is not enough to halt the rising length of retirement driven by higher life expectancy.
In 1981, an average woman time spent around 19 years collecting the state pension – life expectancy at 65 was 18.2 and the retirement age 64. Now an average Swiss woman can expect around 24 years of state pension – life expectancy at 65 had risen to 22.6 years by 2016.
This means that since 1981, the expected pension years for a Swiss woman have gone up 26%. Pushing the retirement age up to 67 would only reduce this period to 21 years, still 2 years longer than it was in 1981.
Finally, the report mentions the challenges Switzerland is facing reforming pensions, in particular the recent failed referendum on the subject.
Full story here Are you the author?
Tags: Editor's Choice,newslettersent,Personal finance
