�鶹��

The “�鶹�� International Pension Gap Index” reveals that when it comes to pension provision, only in very few countries can citizens rely on everything turning out well. It is especially clear that they will not be able to rely on the state pension system alone. Demographic changes and low interest rates are putting a strain on pensions everywhere. The best advice is to plan your long-term financial situation – and therefore your retirement – as actively and as early as possible.

This fact is also clear to the main protagonist of our study: our fictional “average Jane.” We compared 24 pensions systems worldwide based on each country's specific circumstances and the financial situation of an average Jane living there. Her initial position is as follows: 50 years old, single, has until now concentrated on enjoying life and has not actively looked into her retirement situation. She is now wondering whether she is suitably prepared for the “longest vacation” of her life.

Jane starts by listing her living costs and examining her mandatory pension provision to determine her expected retirement income. If her expenses in retirement exceeds the benefits paid by her state and occupational pensions, a pension gap arises. This is the norm rather than the exception for both genders in all the pension systems studied, and is also the case for Jane. Especially because until now she has ignored the possibility of voluntary savings. She now realizes that her pension situation would be much more straightforward if she had looked into it at least twenty years earlier.

Then there is an additional complication. Although the law should treat everyone equally, at first glance it appears that in Switzerland, as in many other countries, women’s pensions are lower than men’s on average. If Jane had had children, her pension would usually be lower due to employment breaks. Also, her salary is average for the country as a whole but still less than the equivalent for a man. In addition, according to the World Health Organization (WHO) women live eight years longer than men and therefore need to finance a longer retirement.

Now that she is aware of her pension gap, Jane calculates how much she will need to save between now and her retirement in order to close it. The amounts that need to be saved vary greatly from one country to another. Whereas in the Netherlands or Australia the amounts in question would be relatively small, in Japan they would be well above average.

She would need to save 14 percent of her income, which puts Switzerland in the top third of the 24 countries studied. Relatively high life expectancy, a comparatively low retirement age and relatively high living costs are the key factors impacting Jane’s situation.

The same applies to working part-time after normal retirement age or adopting a more frugal lifestyle in old age. If Jane had started saving in pillar 3a when she was younger, her dream of owning her own home may have been easier to achieve and she would have been able to optimize her property and pension situation. It is particularly important for women to look into the option of securities in the context of pillar 3a, as the effect of compound returns on retirement savings is considerable. Pension funds which invest retirement savings in securities offer higher potential returns than classic retirement savings accounts.

The situations faced by other “Janes” around the world vary considerably. For example, one country’s pension system might be designed to provide its citizens with a comfortable deck chair when they retire, whereas another might only give them a wooden stool. Anglo-Saxon countries in particular, like the USA, Canada and the United Kingdom, place a much greater emphasis on individual responsibility, with their respective pension systems aiming solely to prevent poverty in old age.

A pension system that promises benefits independently of contributions (defined benefits) is a European invention. Many of our EU neighbors, e.g., Italy and the Netherlands, are more progressive than Switzerland. They are gradually switching to a system of defined contributions (at least for occupational pensions), whereby benefits will be based on personal contributions and market conversion rates. When it comes to retirement age, more advanced models also exist elsewhere in Europe. For example, Germany and Sweden have already raised the retirement age to 67. In Denmark it is even higher and will be raised automatically as life expectancy increases.

In the years leading up to her retirement, Jane can expect regulations to change, e.g., an increase in retirement age. Jane would then have more time to save and could reduce the gender-based pension gap slightly. For younger people, the impact of upcoming changes is potentially greater. This is because most pension systems are under pressure due to demographic changes (more pensioners and fewer people of working age) and will not be able to fulfill their promises. A voluntary retirement plan for which individuals are personally responsible is required, especially in Switzerland. Jane’s situation is proof that by planning your retirement early, you will be able to maintain your current standard of living in retirement.