SWITZERLAND - A study by Towers Watson of the pension schemes at 20 SMI-Index blue-chip Swiss companies has found the best Swiss pension schemes pay out twice as much as the worst ranked.

Without revealing the names behind the ranking, Towers Watson said the most generous second pillar Swiss pension plan gave beneficiaries 55% of their final basic salary (without bonuses and on top of the first pillar pension), while the worst ranked paid out only 30%.

The SMI Swiss Pension Plan Benchmarking Study 2009/2010 also found “there is a large disparity in pension structure, and the financial companies tend to provide the most generous pension benefits, especially for higher-paid employees”.

It was pointed out, however, that it is not the employee contributions which differ greatly from industry to industry but the employer contributions.

Median contribution levels for employees in all companies are 4.7% for 25-year-olds, 6.7% for 35-year-olds and 8.2% for 45-year-olds.

Financial companies, including Credit Suisse, Julius Baer, Swiss Life, Swiss Re, UBS and Zurich Financial Services, tend to offer the most flexibility in employee contributions.

The median employer contribution levels are 7.8% for 25-year-olds, 13.2% for 35-year-olds and 20.3% for 45-year-olds.

The conversion rate, the lowering of which will be subject to a referendum on 7 March, is currently set at 7% for men and 6.95% for women and is compulsory on all second pillar schemes which cover the mandatory occupational pensions.

Schemes including bonuses and other payments above the mandatory level can adopt a lower conversion rate. Towers Watson looked at the median rates at retirement over all schemes in the SMI and found they were set at 5.85% for men and 5.9% for women when retiring at 60, but if they retire five or four years later (for women), men get 6.6% and women receive a conversion rate of 6.5%.  

Almost all schemes were found to have much more generous provisions in cases of invalidity and death than the legal requirements.

If you have any comments you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email julie.henderson@ipe.com