Increasing life expectancy and ongoing low interest rates
When founded in 1948, the AHV pensions scheme considered male life expectancy of men aged 65 to be twelve years and 14 years for women, whereas the same figures today total more than 19 and 22 years respectively for today’s 65-year olds. The proportion between contribution payers and those in receipt of contributions is worsening in the AHV as a result of a combination of increased life expectancy and lower birth rates. As for employee benefits, the combination of increased life expectancy and reduced investment returns due to a high conversion rate is leading to a redistribution from actively insured persons to pension recipients in a manner which is quite alien to the system. The increase in life expectancy due to medical advancement is great news, but when combined with continually low interest rates, it does put retirement provision into a difficult position. The Federal Council’s “Pensions 2020” reform package was their way of countering this trend. The no vote at the ballot box is now impeding our swift departure into quieter waters.