Most people draw their AHV pension when they reach the normal retirement age. As a rule, gainful employment is then given up. Those who previously lived under challenging economic circumstances often fare better afterwards.
The Swiss three-pillar pension system offers various options for drawing statutory and regulatory retirement benefits between the ages of 58 and 70. In view of the future demographic challenges, it is of particular interest for the current and planned reforms of old-age provisions, whether and how this scope is used by the population. What role do the economic situation, working career or joint decision-making in a couple's household play? What are the consequences for the income and wealth situation, but also for further participation in working life, of the individually chosen pension transition? These questions were investigated by the Institute for Economic Studies Basel on behalf of the Federal Social Insurance Office (FSIO) in a study (see PDF).
Ordinary retirement age in the 1st pillar is the norm for drawing a pension
The results first show the enormous default effect of the legal framework on the withdrawal of 1st pillar pensions: around nine out of ten individuals, or 88% of the observed individuals, draw an OASI pension when they reach the regular retirement age. As a rule, people stop working when they draw their pension. Only one in four people continues to work. The probability of women working is lower than that of men, but according to the authors, this is due to the role of women in the couple context and not to gender per se.
Among the people with early AHV withdrawals, there are mainly people in financially precarious circumstances; social welfare recipients are encouraged by the offices to draw AHV at the earliest possible time.
The group with deferred start of AHV receipt is less homogeneous
On the other hand, the group with a deferred start of AHV receipt is less homogeneous: This group usually includes more people with substantial financial resources, many of whom are probably not dependent on AHV pensions. In contrast, people with very low financial means as well as substantial insurance or contribution gaps (more than ten years) are overrepresented. This combination creates the impression that these individuals are seeking to supplement their AHV pension by deferring it. However, a supplement to the AHV pension is only paid out if the deferral has been explicitly declared. Seven out of ten people with substantial financial means actually do so, while only just under one out of six people with very limited financial means takes advantage of this opportunity to improve their pension; for the others, the AHV pension is paid later, but without a supplement. Perhaps different levels of knowledge about how the 1st pillar works is decisive. Accordingly, more active communication about the possibilities and requirement of this flexible system is indicated.
In the 2nd pillar, a majority draws a pension earlier
In occupational pension plans, a slight majority deviates from the regular start of benefits and retires early (52%). These are primarily people who can afford to. Those who retire later (12%) are more likely to have a high proportion of self-employment during their working life, have very low financial means or live with a younger partner. Women are also more likely to retire late.
Influence of the withdrawal of pension capital remains unclear
Extensive net wealth (over CHF 1 million) reduces the probability of an early BV withdrawal, which according to the authors could be related to the fact that capital withdrawals have increased net wealth, but in return reduce the expected BV pension, and thus counteract an early BV pension withdrawal.
Individuals are less lickely to draw their pensions from the1st and 2nd pillars early
The influence of the household or couple context on the start of retirement is significant. Single households are less likely to retire early and more likely to retire late than people in a couple relationship. This applies to both the 1st and the 2nd pillar. In couple households, the tendency to draw a BV pension early is lower if the partner is younger.
Self-employment and high level of education promote gainful employment
The probability of remaining employed after the normal retirement age is significantly influenced by the individual's employment history. On the one hand, people with a complete employment history (without substantial interruptions in employment, e.g. due to care and childcare work, health issues or unemployment) and, on the other hand, self-employed persons are more likely to remain in employment. Furthermore, a high level of education has a positive influence on employment at regular retirement age. Similarly, individuals in a better economic situation are more likely to remain in the labor force. First, because the aforementioned factors generally lead to a better economic situation and, second, because for these individuals, who tend to have higher earned incomes, ending employment entails higher opportunity costs.
Allowances have an influence on gainful employment
Employment at the BV pre-retirement age (58 to 61 years for women and 62 years for men) and at the AHV pre-retirement age (62 to 64 years for women and 63 to 65 years for men) is significantly higher (78% and 62% respectively) than after the regular retirement age (26%). Wage contributions (AHV, IV, EO) must still be paid on earned income after the regular retirement age if it exceeds the exemption amount of 16,800 francs per year per employment or self-employment. It is therefore striking for the authors that primarily persons with substantial financial means are often employed more than once. The available data do not allow us to assess whether employers use employment below the exempt amount to avoid the obligation to pay contributions.
The full study results can be found here.