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Swiss pension system among ‘world’s best’

Switzerland has one of the best pension systems in the world but it lags behind those in Denmark and three other countries, according to an Australian study.

Published: 13 October 2014 22:25 CEST
Swiss pension system among 'world's best'
Photo: AFP

The Swiss rank fifth in the Melbourne Mercer Global Pension Index for 2014, released on Monday, which compares retirement schemes in 25 countries.

Denmark topped the study with a “first class and robust retirement income system that delivers good benefits, is sustainable and has a high level of integrity”.

Switzerland places behind Australia, the Netherlands and Finland in the ranking.

Like the three countries with a higher ranking, Switzerland has a pension system “that has a sound structure with many good features, but has some areas for improvement that differentiate it from an A-grade system”.

Denmark is the only country given an A grade, while Australia and the Netherlands get a B+, and Finland and Switzerland rate a B.

Sweden, Canada, Chile, the UK and Singapore rank behind Switzerland but also received a B grade in the report that assesses the “adequacy, sustainability and integrity” of retirement income programs in different countries.

The report says that Switzerland could improve its pension system through a number of measures , including by “increasing the state pension age over time”.

The Swiss statutory retirement age is 65 for men and 64 for women.

By comparison, Denmark has raised the retirement age to 67 from 65 for citizens born in 1955 or later, while it will be hiked further for those born after 1962.

Switzerland’s pension system consists of an earnings-related public pension with minimum benefits, a mandatory occupational pension scheme and voluntary plans offered by insurance companies and financial institutions.

The study says the Swiss system could also be improved by reducing “pre-retirement leakage by further limiting access ti funds before retirement”.

The minimum age for early retirement (through an occupational or second pillar pension) in Switzerland is 58.

It is also possible to withdraw a state (AHV) pension one or two years ahead of the official retirement date, although with a financial penalty.

The study says that other improvements could be made by:

– introducing a requirement that part of the retirement benefits must be taken as an income stream

– reversing the preferential tax treatment of lump sum payments in comparison to pension payments

– requiring plan trustees to develop a comprehensive risk management policy

For a look at the full report, click here.
 

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INHERITANCE

Inheritance in Switzerland: Which country’s laws should dual nationals follow?

Switzerland has well-defined rules for inheritance and succession rights. But do dual nationals have some leeway in choosing which country's laws to follow?

Published: 13 May 2024 12:20 CEST
Inheritance in Switzerland: Which country's laws should dual nationals follow?

First, let’s look at what Swiss inheritance / succession legislation says.

Who gets what depends on whether you have a will or not when you die (the latter’s legal term is ‘intestate.’)

If you don’t have a will, your estate will be divvied up among your legal heirs: spouse or registered partner and children.

Typically, the spouse gets half of your assets and the children the other half, to be divided equally among them.

In case you have no kids, your parents or even grandparents could inherit from you.

Next in the statuary succession rights  are siblings.

If, however, you have no living relatives whatsoever, your estate will go to the canton or commune of your last residence.

What if you do have a will?

It will give you some, though not total, flexibility in who you want to leave your assets to — and how much. 

For instance, you can choose who your heirs will be and how your estate should be distributed among them.

You can decide to give more than a half to your spouse and less to the children, or vice-versa.

However, your legal heirs — that is, spouse and children — cannot be cut out of your will altogether.

Note that this law applies to Swiss citizens only. If you are a foreign national living in Switzerland, your succession is normally governed by the laws of your country.

However, if you a long-term resident and plan to remain here permanently — for instance, if you have a C permit — you can choose the Swiss law instead of the foreign one to apply upon your death. But you must state your preference in your will.

If you die intestate, then the Swiss legislation will kick in, as it will be deemed the law of your last place of residence.

READ ALSO: 7 things you need to know about Swiss inheritance law

What about dual nationals?

At present, those who have Swiss citizenship in addition to a foreign one, must abide by Switzerland’s inheritance law only.

That’s because, for all intents and purposes (including legal ones), they are considered to be Swiss citizens only.

However, this will soon change.

On December 22nd, 2023, the parliament adopted the Federal Act on International Private Law (PILA), which will give dual nationals in Switzerland the option of basing their succession on the laws of  their ‘other’ country of citizenship.

However, in doing so, dual nationals can’t derogate from Swiss statuary succession rules — that is, they won’t be able to exclude spouses and children from inheriting their part of the estate.

The new legislation is expected to come into force on January 1st, 2025.

READ ALSO: What you should know about dying in Switzerland

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