Pension or Lump Sum? Swiss Retirees Face Conflicts of Interest and Bad Advice

For many Swiss people approaching retirement, one decision can shape their finances for the rest of their lives: whether to take pension-fund savings as a monthly annuity or as a lump sum.

The balance has shifted sharply in recent years. According to the Federal Statistical Office’s new-pension statistics, 45% of people who began receiving a pension-fund benefit in 2024 took only a capital payment. Another 36% chose only an annuity, while 19% combined an annuity with a capital withdrawal.

The appeal of capital payments is largely flexibility. Nearly half of those who chose this option told investment company Swisscanto that flexibility was the main reason. About one-third wanted to invest the money themselves, and roughly the same share saw advantages in passing it on to heirs. Lower pension conversion rates are also often mentioned, although the Swisscanto study found they played a smaller role in the decision.

The financial sector is less eager to discuss another possible factor: conflicts of interest and poor advice. Banks and wealth managers have an interest in clients withdrawing their pension capital and investing it through their services. “When a financial company advises customers while also offering wealth management, the threshold for a conflict of interest is quickly reached,” said Lukas Müller-Brunner, director of the Swiss pension-fund association ASIP.

Many people nearing retirement urgently seek reliable advice but do not know where to find it. Pension funds themselves have been hesitant to provide such guidance, leaving prospective retirees to navigate a decision involving income security, investment control and inheritance on their own.

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When a financial company advises customers while also offering wealth management, the threshold for a conflict of interest is quickly reached.