The occupational pension plan from the 2. Pillar is the most important component of retirement income for many people. But their importance is underestimated. This has consequences, as a recent study by Zurich Switzerland and Vita shows.
For most of us, occupational pension plans (BVG) represent an important part of our personal assets and a large share of our income in old age. Because there, every working person saves, on a collective basis, but for their own pension. But a majority of the population does not know this, according to an important result of the current "Fairplay" study: For the second time, Vita Sammelstiftungen and Zurich Insurance Company, together with the research institute Sotomo, have arranged a representative survey of 1,600 people.
Half perceive LOB contributions as a fee or tax
According to the authors, one indication from the first study was clearly confirmed: Because BVG contributions are deducted directly from wages, many people see them as a kind of tax or levy. Although BVG payroll deductions are paid into personal retirement accounts, only 47% of working people perceive them as an investment in their own retirement capital. 28% see it as a kind of tax ("contribution to safeguarding pensions in Switzerland") and 21% consider it a fee that has to be paid. But this ignorance weakens the basic idea of occupational pension provision as saving for one's own old age. This is also unfortunate for employers, they say. After all, they finance at least half of our contributions. "Employees can only be aware of this benefit if they recognize in the BVG an investment for their own old age", conclude the experts.
Redistribution is considered unfair by the majority
In the 2. Pillar there is a great need for reform. Today, about half of the investment income of the working population is used to finance current pensions, which is not intended in the system. But according to the study, only one-third of respondents are aware of this redistribution. Therefore, the contributing workers among the respondents were educated about this redistribution. They were then asked: "Do you think it's unfair if part of the performance or return of a fixed-term deposit account is not paid out?. of the interest on your BVG pension account is used for the pension benefits of the current generation of retirees?" According to this information, 63% of these respondents found it unfair to.
Promoting understanding, making connections recognizable
"It is worrying when the majority of working people do not understand why they are paying contributions into the 2. Pillar pays in – and what happens to that money. After all, anyone who wants to take responsibility for shaping his or her own future needs a basic understanding of the interrelationships in the Swiss pension system to do so. That's why it's important to promote financial literacy on many levels: In schools, at work, and through the media. Pension fund managers in companies in particular have a duty to act here. Its responsibility is to optimize its facilities so that it can resume its role as 'third contributor' to the best of its ability", comment the study authors.
Financial literacy promotes understanding of LOB
Another finding: "There is a very strong correlation between knowledge about investments and knowledge about one's own pension situation. Those who are well versed in financial products and investments are usually also well informed about their own pension situation in the 2. Pillar well informed. This means that if you want to raise awareness of the importance of the 2. If a company wants to awaken the interest in the 2nd pillar, it must invest in the general financial and investment knowledge of the population."
Knowledge helps, especially in pension provision
It is doubly worthwhile to promote financial knowledge among the population: On the one hand, knowledge helps people make competent decisions related to their occupational pensions. On the other hand, this is also important for private provision and investment, according to another result of the "Fairplay" study. 77% of respondents save if they have money left over at the end of the month. However, most of them deposit it in a savings account out of ignorance, giving away massive potential returns.
Ignorance makes fearful
Because of the lack of knowledge, many people are suspicious of financial markets and their risks, the study authors said. But fear is a bad advisor. Those who invest with a cool head know that this will most likely pay off in the long term: A look at the U.S. stock markets showed that even with an investment horizon of ten years, 95% of the time a positive return is achieved. With an investment horizon of 15 years, the probability is even higher.
Diversification, patience and discipline
"The same rules of the game apply in private as for institutional investors in pension funds: A long breath pays off, because in the long run, the compound interest effect plays out particularly clearly. Diversification is match critical so that crises in certain regions or industries don't jeopardize the entire portfolio", the experts emphasize. And finally, discipline is needed in implementation in order to make the most of added value, true to the advertising slogan of the Vita life insurance company in 1932: "Save right, it matters."