Guest Commentary: There Is No ‘Pension Shock’ in Switzerland’s Second Pillar

The headline of a looming “pension shock” rests on a partial picture, argues Francesca Pitsch. Debate over Switzerland’s second pillar, she says, should consider the entire package rather than isolate one indicator.

Conversion rates have fallen. Demographic change and longer life expectancy have placed pressure on occupational pensions because accumulated retirement savings must be distributed over a longer period. Low interest rates have also made it harder for pension funds to generate the returns needed to maintain benefits without unwanted redistribution.

But falling conversion rates do not affect the bulk of today’s occupational pension benefits, according to the commentary, because many payments now take the form of capital withdrawals. The shift from pensions to capital has continued for years. The Swisscanto Pension Fund Study 2026 found that capital payments made up 51 percent of payouts in 2025, becoming the majority for the first time.

Including capital payments produces a different picture from the VZ Retirement Barometer, which prompted alarmist headlines about millions of Swiss people facing a pension shock. An Avenir Suisse analysis from 2024 found that retirement benefits for men fell only slightly between 2015 and 2022, by 1 to 5 percent. Benefits for women rose by 2 to 6 percent.

The commentary also notes that most pension funds did not cut conversion rates without accompanying measures. Some offset the reductions through compensatory benefits, including direct pension supplements for certain groups of insured workers. Individual pension levels also depend heavily on a person’s employment history, working hours, career interruptions and, above all, salary.