Case study Pension How Anita and Peter Wenger close the pension gap

Anita and Peter Wenger are in their mid-50s. They're married with two grown-up children. Both of them work and they have a joint net income of CHF 120,000. Their current outgoings amount to CHF 110,000 a year.

They were able to save while they were young. Then they had their two children very close together. They bought a house, which they financed in part using funds from their restricted Pillar 3a pension plan. For many years, they found it impossible to save any money.

Currently, they have CHF 60,000 in their accounts and in a securities custody account. Their two Pillar 3a accounts and their holdings in an investment fund are worth CHF 100,000 in total.

Anita and Peter Wenger's savings

Assets in savings account and a securities custody account

CHF   60,000

Pillar 3a retirement savings

CHF 100,000

Total current retirement capital

CHF 160,000

The Wengers are looking forward to their approaching retirement. But they are wondering if they'll be able to maintain their present standard of living after they stop working. They make an appointment to discuss this with their client advisor.

The annual income shortfall

The couple can expect a pension of CHF 40,000 a year from the AHV. According to their pension fund statements, they can anticipate pensions totaling CHF 45,000 a year. In addition, they earn CHF 1,000 annually by renting out a parking spot.

Closing the pension gap

After they retire, the Wengers expect their outgoings to be reduced to CHF 100,000. Together with their client advisor, they compare their present financial situation with what it will be after they retire.

Annual income shortfall after retirement

Annual income shortfall after retirement

Source: UBS

The pension gap

The Wengers discover that their income after retirement will fall short of their outgoings by CHF 14,000. Experience has shown that the capital required to close a gap is around 20 times the annual income shortfall, in this case: CHF 280,000. Against this, their personal retirement capital is now CHF 160,000, plus the 10 x CHF 10,000 that the Wengers will save in the years remaining until their retirement. This means they need to raise CHF 20,000 in capital in addition to the CHF 260,000.

Capital required to cover the income shortfall


Calculation of capital required, CHF 14,000 x 20

CHF 280,000

Projected capital from investments and Pillar 3a

CHF 260,000

Additional capital to be saved prior to retirement

CHF   20,000

The Wengers are glad they've identified their future income shortfall this early. Thanks to discussing the issue in good time, they now have ten years in which to save the CHF 20,000 they need before their retirement. They're sure they'll be able to save the extra CHF 2,000 a year, and they're happy that this small effort is all it will take for them to enjoy the third stage of their lives without worry.

After careful consideration, they decide to go for the advantages of a UBS Fisca account and spread the missing CHF 2,000 a year over their Pillar 3a accounts.