Closing the Decumulation Gap in Switzerland: From Lump Sums to Sustainable Retirement Income Solutions

More Swiss retirees are taking part or all of their occupational pension savings as a lump sum. In 2024, these payments reached CHF 17.1 billion. Taking the capital offers flexibility, but also leaves retirees with a difficult task: turning their savings into an income that lasts through changing markets and a retirement that may be longer than expected.

In this discussion paper, developed with Leonteq, we examine where today’s retirement income offerings fall short and how insurers can help close the gap.

Key Takeaways

• Investment flexibility alone does not secure lifelong income: Retirees who draw on their savings remain exposed to market losses and the risk of outliving their capital. Advice and diversified portfolios can help, but do not replace the protection that comes from pooling longevity risk.
• Reliable income and flexibility can work together: We explore an approach that combines a guaranteed income floor for essential spending, alongside AHV/AVS, with an invested portion for additional spending and inheritance goals. The Dutch pension reform offers useful lessons on combining individual accounts with collective risk sharing.
• Partnerships can help insurers put these ideas into practice: Insurers bring the capacity to provide lifelong income guarantees. Specialist structuring partners can support product design, hedging and implementation, helping insurers develop new offerings while retaining the client relationship.

For insurers, the opportunity is to develop products around the income people need throughout retirement. The paper considers what this means for product development and delivery, and suggests priorities for providers, regulators and advisers.

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This discussion paper is intended for Swiss insurance experts only.