Swiss Pension Funds: State of the Second Pillar
Funds show financial stability, but key questions persist for the insured.
Swiss pension funds managed over 1.2 trillion Swiss francs by the end of 2024. Assets have grown strongly, and the financial situation has improved. However, new figures from the Federal Statistical Office also show how much the second pillar is changing.
For millions of employed individuals, occupational pensions are a central part of their retirement provision. Every month, contributions from employees and employers flow into the pension fund. The accumulated money is invested and intended to secure income during retirement.
The new pension fund statistics from the Federal Statistical Office (FSO) provide a long-term view of this development. They cover the years 2012 to 2024. The latest results reveal a system that is financially stronger than just a few years ago, but also faces structural challenges.
1.22 Trillion Swiss Francs in the Second Pillar
At the end of 2024, the total assets of the 1292 registered pension institutions amounted to 1220.6 billion Swiss francs. In the previous year, it had been 1129.1 billion Swiss francs. Concurrently, approximately 4.79 million people were actively insured. Additionally, about 1.37 million individuals were receiving benefits.
However, the growth of pension fund assets did not follow a linear path. Development strongly depends on financial markets. In 2022, a poor investment year led to significant losses. A clear recovery followed in 2023 and especially in 2024.
In 2024, pension institutions achieved an average net asset performance of 7.4 percent. This directly impacted their financial situation. The average funding ratio increased from 110.3 percent at the end of 2023 to 114.7 percent at the end of 2024.
Almost All Funds Were Covered by End of 2024
The funding ratio simply indicates how much a pension fund's assets stand against its actuarial liabilities. If it falls below 100 percent, it generally indicates an underfunding.
At the end of 2024, only 0.8 percent of pension institutions were underfunded. A year earlier, this figure was 7 percent. The average financial situation of pension funds had thus significantly improved.
This is good news for the pension system. However, it does not imply that every individual pension fund is in equally good financial standing. The situation varies depending on the fund, risk structure, investment policy, and the composition of the insured members.
Equities Gain Importance
A look at the investments shows how heavily pension funds rely on financial market developments. At the end of 2024, 31.6 percent of the largest investment positions were in equities. Bonds accounted for 26.9 percent, and real estate for 21.9 percent.
This also explains the strong year-to-year fluctuations. If equity markets rise, pension assets can grow significantly. If prices fall, the financial situation can deteriorate substantially within a year.
For the insured, this means that a large portion of their retirement capital is indirectly exposed to developments in international financial markets. At the same time, pension funds have long-term investment horizons and can therefore generally withstand market fluctuations better than short-term investors.
Fewer and Fewer Pension Funds
Another long-term trend is noticeable: the number of pension institutions is decreasing, while the number of insured individuals is rising. The concentration process thus continues.
As early as 2022, the FSO observed that an average of 3415 active insured individuals belonged to one pension institution. Ten years prior, this figure was 1861. Concurrently, more and more insured individuals were part of larger institutions. citeturn2search1
This trend does not automatically imply that smaller pension funds are poorly managed. However, mergers can create economies of scale and reduce administrative costs. At the same time, large pension institutions become more systemically important and must manage their risks accordingly and carefully.
What Does This Mean for Your Own Pension?
This is where it gets more complicated for insured individuals. A high funding ratio for a pension fund does not automatically translate into a high personal pension.
Crucial factors include the accumulated retirement savings, the interest rate, employer and employee contributions, and the terms of the respective pension regulations. When retiring, the conversion rate also plays a central role. It determines how much annual pension is generated from the available retirement capital.
It is precisely here that conditions have changed in recent years. Many pension funds have lowered their conversion rates. This is due, among other things, to rising life expectancy and long-term changes in interest rate conditions.
This means that even if a pension fund is financially sound, the expected pension for a younger insured individual may be lower than that of previous generations – especially if the pension conditions of the respective fund change.
2024 Was a Good Year – But No Guarantee
The current figures should therefore not be interpreted as a definitive all-clear. The strong financial position at the end of 2024 was heavily influenced by positive investment results.
A look at previous years also shows this. After the sharp downturn in financial markets in 2022, funding ratios significantly deteriorated. A recovery then began. Pension funds must therefore continue to build up sufficient reserves to withstand less favourable stock market years.
The Occupational Pensions Supervisory Commission (OPSC) already reported a further improvement for the end of 2025: the average funding ratio for pension institutions without state guarantee and without full insurance solutions rose to 117.1 percent. The average net asset performance in 2025 was 6.1 percent. citeturn1search0
However, these figures originate from a different survey than the FSO pension fund statistics and should therefore not be directly equated.
The Major Challenge Is Yet to Come
In the long term, the second pillar faces a difficult task: the population is aging, while the number of pensioners is increasing. At the same time, pension funds must structure their investments to generate sufficient returns without taking disproportionate risks.
Additionally, there is the political question of how occupational pensions should be designed in the future. This involves minimum benefits, conversion rates, financing, and the extent to which occupational pensions should redistribute wealth between generations.
The new FSO data provides an important basis for this. It primarily shows that the second pillar currently possesses enormous financial resources and was overall in a solid position at the end of 2024.
However, for individual employees, a different number is crucial: not the total assets of all pension funds, but their personal retirement savings and the terms of their own pension institution.
Therefore, anyone wanting to know how good their own retirement provision truly is should not only look at the headlines about pension funds but also at their personal pension statement. This document details contributions, accumulated retirement capital, and projected retirement benefits.
