Pile of change next to a piggy bank

Pension provision for old age

How much should we have in our private pension?

My partner and I (both 55) have a combined annual gross income of 150,000 CHF. We put just under 10 per cent of this aside each year. Will this be enough to maintain our standard of living in old age?

Isabelle von der Weid

That depends on how high your expenses will be. While it is true that ­work-related costs, such as travel expenses, lunch or taxes, disappear or reduce when you retire, ­retirement also leaves more time for expensive leisure activities, and health-related costs are likely to rise.

Calculation guide

As a rule of thumb, you require 80 per cent of your gross annual income in old age. In your case, deducting the savings rate results in a requirement of 108,000 CHF per year – and this figure will only go up.

As a rule of thumb, you require 80 per cent of your gross annual income in old age.

Isabelle von der Weid

How much OASI and the pension fund should cover

In many cases, the income from OASI and the pension fund covers around 60 per cent of the individual’s current gross income. For you and your partner, this means 90,000 CHF from the first and second pillars. However, you must work until you reach the normal retirement age of 65, otherwise your pension will be lower. Other factors such as part-time work, maternity leave or unemployment can also lead to deductions.

What you need to contribute

There is an estimated gap of 18,000 CHF per year between your needs and the benefits you can expect from the mandatory pillars. You need to bridge this gap with private assets in order to maintain your ­standard of living. To do this, you will need additional retirement assets of 360,000 CHF by the age of 85. However, as life expectancy continues to rise and inflation eats up some of the assets ­you have, it is better to save a little more than this.

About the author: Pension expert Isabelle von der Weid works as a customer advisor at Migros Bank.­