Congratulations! As a person working in Switzerland, you have the privilege of accessing one of the best pension systems in the world. Switzerland’s distinguished pension system is based on 3 pillars that ensure a high level of social security. One must, however, question whether it can be entirely safe? Are you sure you have examined all the potential pitfalls?

Here is what you need to know to get the most out of the Swiss pension system and have the retirement you deserve.

Additional resources to discover more details about the Swiss pension system:

  1. The Swiss Three-Pillar System: a brief overview

Risks to your pension

The 3 Pillars have recently come under increased scrutiny and pressure from an aging Swiss population. Many people think that changes to the pension system are needed to ensure it achieves its goal of providing financial stability to Swiss retirees. One particular problem is that Pillar 1 is already incurring debts paying out more than it receives. Something's got to give.

And the tables have turned. After a long and hard-fought fight, the Swiss citizens have finally voted to increase the retirement age for women from 64 to 65, bringing it in line with that of men. This decision was made in response to the urgent need to keep old-age pensions at their current level.

Switzerland’s pension system, like that of many countries, is being undermined by rising life expectancy. The number of people working is no longer sufficient compared to the number of pensioners. According to the United Nations Population Division, global life expectancy at birth for both sexes has increased from 46.5 years in 1950 to 71.7 years in 2022 and is projected to rise to 77.3 by 2050.

The increase in global life expectancy
Source: Statista

The three-pillar system, designed to provide a high degree of social security, generally delivers on its promise. Yet, nowadays, both Pillar 1 and 2 combined might be insufficient on their own to live on, and many retirees must rely on supplementary income sources. Furthermore, low-income earners – often women who had part-time jobs during their working life – are poorly insured in occupational insurance, resulting in lower pensions.

To address these retirement inequalities and demographic changes in society, the Swiss authorities have launched several reforms, as have many other countries. However, the Swiss direct democracy and the complexity of the system have slowed down the process.

It took until September 2022 for the most recent Old Age and Survivors Insurance (OASI) revision to be approved in a referendum, resulting in an increase in value-added tax (VAT) and the much-anticipated increase in the retirement age for women from 64 to 65, the retirement age for men. This decision marks quite a revolution in Switzerland, whereas most industrialized countries have eliminated gender disparities and delayed the retirement age years ago.

Pillars 1 and 2 are presently anticipated to cover up to 60% of pre-retirement income, despite the aforementioned difficulties. However, many predict that this figure will fall to 45% by 2040 as the pension system endures eventual changes. Whether this will be enough for your retirement is a difficult question to answer.

Going beyond the 3 Pillars

Pension funds are intended to be conservative in their investment outlook. As a result, relying exclusively on the 3 Pillars for retirement planning may leave you disappointed. For this reason, many Swiss residents top up their retirement savings with additional investments in more lucrative asset classes, such as equity, real estate, and private equity.

For instance, real estate investments offer a unique set of its own 3 pillars, including diversification, stable income, and potential appreciation in value. Our comprehensive analysis indicates that adding even a small amount of real estate to your portfolio can significantly increase return while reducing volatility.

As a result, we discovered that each 10% decrease in stocks and bonds in a portfolio, combined with an equal rise in real estate allocation, can result in a considerable improvement in portfolio returns and a decrease in volatility. Our research has found two highly effective diversification strategies, namely the well-diversified 40/40/20 and 30/30/40 allocations of stocks, bonds, and real estate. Both strategies have produced remarkable outcomes. Notably, when compared to the traditional 60/40 portfolio, these strategies showed an impressive 142% decrease in volatility over the past ten years. In addition, the latter strategy, with a higher allocation to real estate (40% vs. 20%), has produced slightly higher returns.*

Real estate risk/return profile based on the quarterly compound return for the past 10 years

* The calculations were made using the SIX – Swiss Market Index (SMI) as the Swiss stock market, SXI Real Estate® Fnds Broad TR (SWIIT) as the Swiss real estate market, and the SBI® AAA-BBB Total Return (SBR14T) as the Swiss bond market.

Furthermore, while there is no guarantee that home prices will always rise, history has shown that real estate values tend to increase in value over time. Additionally, rental income from real estate investments can offer a consistent supply of cash flow during retirement. This combination of stable income and value appreciation provides an effective hedge against inflation, further enhancing the attractiveness of real estate investment as a feasible option for retirement planning.


The Swiss pension system is one of the best in the world, with its three pillars offering a comprehensive approach to retirement. However, no system can withstand the weight of aging baby boomers. Changes are needed, which may mean that your 3 Pillars retirement income is lower than what you would anticipate or require for a comfortable retirement.

Do not leave the fulfillment of your retirement goals to chance, relying entirely on the discretion of government officials or the conservative investment strategies of pension fund managers (as a result of the legal framework that limits the freedom for investment decisions). To ensure a successful retirement, it is essential for you to commence your planning and investment strategies without delay. Take decisive action now to remedy past inaction and propel yourself towards a secure retirement future.

Find out more about how to access Swiss real estate:

  1. Building Resilience During Times Of Uncertainty: Turning Real Estate Into A Real Fortune
  2. Getting Started In Real Estate Investing: How Not To Fall Into The Trap Of Outdated Options?
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