Bütler, MonikaRuesch, Martin2012-06-082012-06-082007-12https://hdl.handle.net/10986/7567Switzerland's pension system has attracted considerable attention, mainly due to its reliance on a three-pillar structure. A relatively small pay-as-you-go system (first pillar) is complemented by a mandatory, employer-based, fully funded occupational pension scheme (second pillar). The main goal of this paper is to provide a detailed description and analysis of the Swiss pension system. Particular emphasis is placed on the second pillar and its role in the provision of old age benefits within the Swiss social security system. The paper shows, for example, that a typical individual with an uninterrupted career can expect a net (after-tax) replacement rate of at least 70 percent. Occupational pension plans are highly regulated. Minimum interest rate requirements and minimum conversion rates (at which the accumulated retirement balances are transformed into annuity streams) introduce many elements of defined benefit plans into notionally defined contribution schemes. The resulting money's worth ratios are very high (with the exception of single males). Switzerland also has a high annuitization rate by international standards (approximately 80 percent). However, due to high fragmentation of the scheme and non-uniform accounting practices, some aspects of the system are not very transparent. The paper sheds light on the financial health of the pension system and the evolution of the regulatory framework in the past two decades.CC BY 3.0 IGOACCOUNTINGADDITIONAL CONTRIBUTIONSADDITIONAL INCOMEADDITIONAL PAYMENTSADDITIONAL PENSIONADMINISTRATIVE COSTSALTERNATIVE INVESTMENTSAMOUNT OF MONEYANNUAL WAGEASSET ALLOCATIONASSET MANAGEMENTAVERAGE CONTRIBUTIONAVERAGE PENSIONAVERAGE PENSIONSAVERAGE WAGEAVERAGE WAGESBANK PRODUCTSBANKSBENEFICIARIESBENEFIT PLANBENEFIT PLANSBEQUESTBONDBONDSBUSINESS CYCLECALCULATIONCALCULATIONSCAPITAL MARKETCAPITAL REQUIREMENTSCAPITAL STOCKCASH FLOWSCHILD CARECLAIMANTCONSOLIDATION PROCESSCONTRIBUTIONCONTRIBUTION RATECONTRIBUTION RATESCONTRIBUTION SCHEMESCONTRIBUTIONSCREDIT BALANCECREDIT BALANCESCREDITSCURRENT PRICESCURRENT RATEDEFINED CONTRIBUTION PENSIONDEGREE OF RISKDEGREES OF RISKDEPENDANTSDIFFERENT INTEREST RATEDIFFERENT INTEREST RATESDISABILITIESDISABILITYDISABILITY BENEFITSDISABILITY INSURANCEDISABILITY PENSIONDISABILITY PENSIONSDISCOUNT RATEDISCOUNT RATESDIVORCEEARLY RETIREMENTEARNINGSEXPENDITURESFAIR VALUATIONFEMALE WORKERSFINANCIAL ASSETSFINANCIAL CONSTRAINTSFINANCIAL DIFFICULTIESFINANCIAL HEALTHFINANCIAL MARKETSFINANCIAL POLICYFINANCIAL SITUATIONFINANCIAL SYSTEMSFIXED INCOMEFIXED INCOME INVESTMENTSFREE ASSETSFUND MANAGERSGOVERNMENT BONDGOVERNMENT REVENUESGROSS INCOMEGUARANTEE FUNDHEALTH INSURANCEINCOMEINCOME GROUPSINCOME INCREASEINCOME LEVELSINCOME SOURCEINCOME STREAMINDIVIDUAL PENSIONINDIVIDUAL RETIREMENTINFLATIONINSURANCE COMPANYINTEREST RATEINTEREST RATESINTERNATIONAL BANKINTERNATIONAL STANDARDSINVESTMENT OPPORTUNITIESINVESTMENT PORTFOLIOINVESTMENT REGULATIONSLABOR FORCELABOR MARKETLIABILITYLIABILITY MANAGEMENTLIFE EXPECTANCYLIFE INSURANCELIFE INSURANCE COMPANIESLIFETIMELIVING COSTSLIVING STANDARDLONG-TERM PROJECTIONSLOW COSTLOW INCOMELOW-INCOMELOW-INCOME WORKERSLOWER INTEREST RATELOW­INCOMELUMP SUMLUMP SUMSMARGINAL UTILITY OF CONSUMPTIONMARKET CONDITIONSMARKET DEVELOPMENTSMARKET INTEREST RATESMARKET RETURNSMARKET RISKSMARKETINGMARRIED COUPLEMARRIED COUPLESMARRIED WOMENMATURITYMAXIMUM CONTRIBUTIONMAXIMUM CONTRIBUTION RATESMINIMUM BENEFITMINIMUM BENEFITSMINIMUM CONTRIBUTIONMINIMUM PENSIONMINIMUM RATE OF RETURNMONTHLY INCOMEMONTHLY INCOMESMORTGAGEMORTGAGE PAYMENTSNOMINAL YIELDOCCUPATIONAL PENSIONOCCUPATIONAL PENSION SCHEMEOCCUPATIONAL PENSION SCHEMESOCCUPATIONAL PENSIONSOCCUPATIONAL PLANSOLD-AGE PENSIONOLDER WORKERSPENSIONPENSION BENEFITPENSION BENEFITSPENSION COMPANIESPENSION FUNDPENSION FUNDSPENSION PLANPENSION PLANSPENSION PROVIDERPENSION PROVIDERSPENSION REFORMSPENSION SYSTEMPENSION SYSTEMSPENSIONERSPENSIONSPOVERTY RATEPRESENT VALUEPRIVATE PENSIONPUBLIC PENSIONPUBLIC PENSION SCHEMEREAL ESTATERECESSIONREFERENDUMREGULATORY AUTHORITIESREGULATORY FRAMEWORKREPLACEMENT RATEREPLACEMENT RATESRESERVESRESPONSIBILITIESRETIREDRETIRED INDIVIDUALRETIRED INDIVIDUALSRETIREMENTRETIREMENT AGERETIREMENT AGESRETIREMENT ASSETSRETIREMENT BENEFITSRETIREMENT DECISIONRETIREMENT DECISIONSRETIREMENT INCOMERETIREMENT INCOMESRETIREMENT PLANSRETIREMENT PRODUCTSRETIREMENT PROGRAMSRETIREMENT SAVINGSRETURNSRISK MANAGEMENTRISK MANAGEMENT STRATEGIESRISK PREMIUMSAFETY NETSALARYSAVINGSSAVINGS INSTRUMENTSSMALL EMPLOYERSSOCIAL INSURANCESOCIAL INSURANCESSOCIAL SECURITYSOCIAL SECURITY CONTRIBUTIONSSUPERVISION OF PENSION FUNDSTAKE-UP RATETAKE-UP RATESTAXTAX ADVANTAGETAX RATETAX TREATMENTTRANSPARENCYTRUST FUNDTRUST­FUNDUNEMPLOYMENTVALUATIONVALUE OF PENSIONWAGE GROWTHWAGESWITHDRAWALWORK FORCEWORTHYIELD CURVESYOUNGER WORKERSZERO COUPONWorld Bank10.1596/1813-9450-4438