Few Swiss spend their retirement savings on real estate
Published: Thursday, Feb 1st 2024, 12:31
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Few Swiss people touch their pension assets to buy an apartment or a house. This is the result of an analysis published by insurer Axa on Thursday.
As the analysis showed, only a fraction of Axa policyholders decided to spend their retirement savings on a property purchase, less than 3% in total. "The Swiss are not prepared to take risks with their pension capital," said Kume Hasani-Ferati from Axa, categorizing the results. Although it is permitted by law, there is a risk of a pension gap if savings are withdrawn in advance.
For example, insurance benefits are at stake with an advance withdrawal: "If I have withdrawn money in advance and become disabled a year later, I have to live with a lower pension," says the insurance expert.
Although the option of pledging is safer, it does entail higher interest rates. With a pledge, the bank can access the pension fund money if the borrower fails to meet their obligations and does not pay the mortgage interest, for example. To this end, the mortgages are increased by the pledged amount. "It may be that the annual burden becomes too high," concludes Hasani-Ferati.
Men are more likely to withdraw money before
According to the report, four out of 1,000 people have withdrawn their pension fund assets, the so-called second pillar, prematurely in recent years. A further 0.4 percent had pledged their pension fund assets.
According to the analysis, three quarters of people who withdrew pension fund assets in advance were men. Moreover, they generally withdrew higher amounts than women, but also had a higher volume of money at their disposal.
However, 0.3 percent of insured persons withdrew money from the third pillar for real estate purchases each year, while 1.5 percent opted for a pledge.
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